EPA 230/1-74-032'
SEPTEMBER, 1974
ECONOMIC ANALYSIS
OF
EFFLUENT GUIDELINES
THE METAL FINISHING INDUSTRY
QUANTITY
U.S. ENVIRONMENTAL PROTECTION AGENCY
Office of Planning and Evaluation
Washington D.C. 20460
-------
This document is presently available in limited quantities
through the U.S. Environmental Protection Agency, Informa-
tion Center, Ruth Brown, Room W-327 Waterside Mall,
Washington, D. C. 20460.
The document will subsequently be available through the
National Technical Information Service, Springfield,
Virginia 22151.
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EPA - 230/1-74-032
ECONOMIC ANALYSIS
OF
THE PROPOSED EFFLUENT GUIDELINES
THE METAL FINISHING INDUSTRY
SEPTEMBER, 1974
OFFICE OF PLANNING AND EVALUATION
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
CONTRACT NO. 68-01-1545
Environmental Protection Agency
Region V« Librar
Region V« Library
230 £r,i-:-ii r^arhom Street
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PREFACE
The attached document is a contractor's study prepared for
the Office of Planning and Evaluation of the Environmental
Protection Agency ("EPA"). The purpose of the study is to
analyze the economic impact which could result from the appli-
ation of alternative effluent limitation guidelines and standards
of performance to be established under sections 304(b) and 306
of the Federal Water Pollution Control Act, as amended.
The study supplements the technical study ("EPA Development
Document") supporting the issuance of proposed regulations under
sections 304(b) and 306. The Development Document surveys exist-
ing and potential waste treatment control methods and technology
within particular industrial source categories and supports pro-
posal of certain effluent limitation guidelines and standards of
performance based upon an analysis of the feasibility of these
guidelines and standards in accordance with the requirements of
sections 304(b) and 306 of the Act. Presented in the Development
Document are the investment and operating costs associated with
various alternative control and treatment technologies. The
attached document supplements this analysis by estimating the
broader economic effects which might result from the required
application of various control methods and technologies. This
study investigates the effect of alternative approaches in terms
of product price increases, effects upon employment and the con-
tinued viability of affected plants, effects upon foreign trade
and other competitive effects.
The study has been prepared with the supervision and review of
the Office of Planning and Evaluation of EPA. This report was
submitted in fulfillment of Contract No. 68-01-1545, Task Order
No. 5 by A. T. Kearney,'Inc. Work was completed as of September,
1974.
This report is being released and circulated at approximately the
same time as publication in the Federal Register of a notice of
proposed rule making under sections 304(b) and 306 of the Act for
the subject point source category. The study is not an official
EPA publication. It will be considered along with the information
contained in the Development Document and any comments received
by EPA on either document before or during proposed rule making
proceedings necessary to establish final regulations. Prior to
final promulgation of regulations, the accompanying study shall
have standing in any EPA proceeding or court proceeding only to
the extent that it represents the views of the contractor who
studied the subject industry. It cannot be cited, referenced,
or represented in any respect in any such proceeding as a state-
ment of EPA's views regarding the subject industry.
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EPA REVIEW NOTICE
This report has been reviewed by the Office of Planning
and Evaluation of EPA and approved for publication. Approval
does not signify that the contents necessarily reflect the
views and policies of the Environmental Protection Agency, nor
does mention of trade names or commercial products constitute
endorsement or recommendation for use.
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ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF PLANNING AND EVALUATION
ECONOMIC ANALYSIS OF PROPOSED EFFLUENT GUIDELINES
METAL FINISHING INDUSTRY
TABLE OF CONTENTS
SECTION DESCRIPTION PAGE
EXECUTIVE SUMMARY
Section I - Metal Finishing Industry
Characteristics 2
Section II - Financial Characteristics
of the Firms in the Industry 5
Section III - Pricing Analysis 8
Section IV - Impact Framework 9
Section V - Technical and Cost Data
Base 9
Section VI - Impact Analysis 16
Section VII - Limits of the Analysis 26
Summary of Impact Assessment 27
I METAL FINISHING INDUSTRY CHARACTERISTICS
I-A INTRODUCTION
Statement of the Problem I - 1
Scope of Industry Coverage 1-2
Study Cost Data 1-2
Method of Approach 1-3
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-11-
SECTION DESCRIPTION PAGE
I-B SEGMENTATION OF THE INDUSTRY
Industry 1-7
EPA Industry Categorization 1-8
"Establishments" Versus
"Installations" I - 10
"Independent" Versus "Captive"
Operations I - 11
Process Segments 1-12
Summary 1-17
I-C METAL FINISHING INDUSTRY AND
MARKET CHARACTERISTICS
Introduction 1-19
Market Demand 1-19
Substitution Potential 1-25
End Use Markets 1-29
Industry Size Characteristics 1-30
Industry Location 1-38
Industry Survey 1-40
Point of Effluent Discharge 1-42
Impact Segmentation 1-44
Summary 1-47
II FINANCIAL .CHARACTERISTICS OF THE
FIRMS IN THE INDUSTRY
General Financial Characteristics II - 2
Operating Revenues II - 3
Profitability II - 7
Value of Assets II - 12
Profit Margin Constraints II - 14
Financial Additional Capital
Requirements 11-17
III PRICING ANALYSIS
Factors Considered in the
Pricing Decision III - 1
Capacity and Quality Considerations III - 2
IV IMPACT FRAMEWORK
Introduction IV - 1
Approach to Assessment IV - 1
Assumptions IV - 2
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SECTION DESCRIPTION PAGE
IV Dynamics IV - 3
Impact Framework IV - 4
Impact Assessment IV - 11
V TECHNICAL AND COST DATA BASE
V-A METAL FINISHING PROCESSES AND
PRESENT INDUSTRY TREATMENT
TECHNOLOGY
Metal Finishing Processes V - 1
Typical Process Flow V - 16
Sources of Water Pollution V - 17
Present Effluent Treatment
Technology V - 20
Economic Considerations in
Treatment Method Selection V - 22
Other Considerations V - 22
V-B PROPOSED EFFLUENT GUIDELINES
AND COSTS
Model Plants Production
Processes V - 31
Capital Equipment and Annual
Operating Costs V - 35
Methodology for Applying Model
Costs to Industry Segments V - 47
Annual Cost of Pollution for
Industry Segments V - 50
VI IMPACT ANALYSIS
VI-A BASELINE INDUSTRY FORECAST
Market Conditions VI - 1
Baseline Forecast VI - 5
Market Assumptions VI - 11
VI-B PRICE EFFECTS
Price Determination VI - 13
Market Price Adjustment to
BAT/BPT Investment VI - 16
Price Factors - 1977 VI - 17
Market Price Increase - 1977 VI - 23
Price Factors - 1983 VI - 25
Market Price Increase - 1983 VI - 28
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-IV-
SECTION
VI-B
VI-C
DESCRIPTION
Elasticity of Demand
Summary
ECONOMIC IMPACT
Introduction
Volume Impact
Operational Impacts
Customers and Suppliers
Capital Investment and Financing
Micro - Impacts
Closure Analysis
Closure Estimates
Total Annual Costs
Other Impacts
Summary of Impact Assessment
PAGE
VI - 29
VI - 32
VI
VI
VI
VI
VI
VI
VI
VI
VI
VI
VI
34
34
39
47
51
55
63
77
88
93
94
VII
LIMITS OF THE ANALYSIS
Accuracy
Critical Assumptions in the
Analysis
Critical Parameter Estimates
VII - 1
VII - 4
VII - 6
APPENDIX
B
C
D
LIST OF APPENDICES
DISCUSSION OF POLLUTION CONTROL FOR
IN-PLANT OR CAPTIVE METAL
FINISHING OPERATIONS
IMPACT SEGMENTATION FACTORS
INTRODUCTION
BATTELLE COLUMBUS LABORATORIES
PROPOSED EFFLUENT GUIDELINES
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-v-
LIST OF TABLES
TABLE NUMBER TITLE PAGE
Process Segment Study Coverage 1
Metal Finishing Establishments by
Process Type and Plant Size by
Number of Employees 4
Lower and Upper Bounds of Process
Plant Type for Each Process
Segment 14
Relationship of Model Plant Size
and Industry Establishment
Segments 15
Forecast of Establishments,
Employment and Value of Shipments
in the Metal Finishing Industry 17
Summary of Estimated First Year
Reduction from Baseline
Forecast 19
Estimated Closures Due to Effluent
Limitation Guidelines of 1977
and 1983 24
Summary of Estimated Closures in
Relation to the 1967 Number
of Establishments 25
1-1 Total Metal Finishing Establishments 1-9
1-2 Metal Finishing Industry Major
Process Segments and Number of
Establishments 1-13
1-3 Process Segment Study Coverage 1-16
1-4 Major Industries Using Metal
Finishing Services by Process
Type 1-29
1-5 Number of Metal Finishing
Establishments by Process Type -
1967 I - 30
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-VI-
TABLE NUMBER TITLE PAGE
1-6 Metal Finishing Establishments by
Process Type and Plant Size by
Number of Employees -1967 1-31
1-7 Metal Finishing Industry Value of
Shipments by Process Type - 1967 1-33
1-8 Metal Finishing Establishment
Market Share by Plant Size - 1967 1-34
1-9 Metal Finishing Industry Value
Added by Manufacture by
Establishment by Process Type -
1967 I - 35
1-10 Metal Finishing Value Added by
Plant Size - 1967 1-36
1-11 Metal Finishing Industry Employment
by Process Type - 1967 1-37
1-12 Metal Finishing Employment by
Establishment Size 1-38
1-13 Geographical Location of Metal
Finishing Establishments - 1967 1-39
1-14 Summary of Waste Stream Disposal
Methods of NAMF Plants 1-43
1-15 Estimated Number of Metal Finishing
Plants by Plant Size and Type of
Discharge - 1967 1-44
II-1 Metal Finishing Industry - General
Financial Statistics - 1967 II - 3
II-2 Fixed and Variable Operating
Costs II - 5
II-3 Fixed and Variable Operating
Costs (1973 Dollars) II - 6
II-4 Distribution of Profits After Tax
(as Percent of Total Assets) by
Firm Asset Size, 1969-1972 II - 7
II-5 Summary Statistics on Production
Expense Operating Expense and
Profits (1973 Dollars) II - 9
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-Vll-
TABLE NUMBER TITLE PAGE
II-6 Variation in Production Expense
and Profits II - 10
II-7 Metal Finishing Industry Worth
Statistics by Firm Size, 1973 II - 13
V-l Summary of Selected Metal
Finishing Processes in Surveyed
Plants V - 5
V-2 Summary of Proposed BPT Effluent
Guidelines by Applicable
Subcategory V - 25
V-3 Summary of Proposed New Sources
Effluent Guidelines by Applicable
Subcategory V - 30
V-4 Lower and Upper Bounds of Process
Plant Type for Each Process
Segment V - 33
V-5 Model Plant Production and Water
Use Rates V - 34
V-6 Summary of BPT Capital Costs -
Alternate A - By Type of Process
and Employment Size - 1974 V - 37
V-7 Summary of BPT Annual Costs -
Alternate A by Type and Size of
Establishments - 1974 V - 41
V-8 Summary of Reduced Capital Costs
for Clarification Technology
for Municipal Dischargers - 1974 V - 43
V-9 Summary of Annual Cost for Model
Plants - BPT - Alternate B -
1974 V - 44
V-10 Model Plant Costs for BAT
Technology V - 45
V-ll Annual Operating Cost (1974)
Comparison - BPT and BAT Model
Plant V - 46
V-12 Model Plant Process Segments V - 48
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-Vlll-
TABLE NUMBER TITLE PAGE
V-13 Relationship of Model Plant Size
and Industry Establishment
Segments V - 49
V-14 Summary of Alternate A Annual
Costs - 1977 V - 51
V-15 BPT Capital Costs - 1977 V - 52
V-16 Summary of Alternate B (Pretreatment)
Annual Costs - 1977 V - 53
V-17 Pretreatment Capital Costs - 1977 V - 54
V-18 Summary BAT Annual Incremental
Costs Over BPT V - 54
V-19 Incremental BAT Capital Costs -
1983 V - 55
VI-1 Projected Range of Growth Rates
of Customer Industries VI - 2
VI-2 Market Share Trends in the Metal
Finishing Industry VI - 4
VI-3 Forecast of Number of Establishments
in the Metal Finishing Industry VI - 6
VI-4 Forecast of Employment Within
the Metal Finishing Industry VI - 7
VI-5 Forecast of Value of Shipments
Within the Metal Finishing
Industry VI - 8
VI-6 Number of Establishments Forecast
by Process Segment VI - 9
VI-7 Employment Forecast by Process
Segment VI - 10
VI-8 Value of Shipments Forecast by
Process Segment VI - 11
VI-9 Comparison of Profits and Minimum
Pollution Control Operating
Costs VI - 17
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-IX-
TABLE NUMBER TITLE PAGE
VI-10 Lower Bound - Price Increase
Factors (as a Percent of Sales)
by Process Segment and
Establishment Size - Alternative
A - 1977 VI - 19
VI-11 Upper Bound - Price Increase
Factors (as a Percent of Sales)
by Process Segment and
Establishment Size - Alernative
A - 1977 VI - 20
VI-12 Lower Bound - Price Increase
Factors (as a Percent of Sales)
by Process Segment and
Establishment Size - Alternative
B - 1977 VI - 22
VI-13 Upper Bound - Price Increase
Factors (as a Percent of Sales)
by Process Segment and
Establishment Size - Alternative
B - 1977 VI - 23
VI-14 Estimated Market Price Increases
as a Percent of Sales - Alternate
A - 1977 VI - 24
VI-15 Estimated Market Price Increase
Factors as a Percent of Sales -
Alternative B - 1977 VI - 25
VI-16 Lower Bound - Price Increase
Factors by Process Segment and
Establishment Size - 1983 VI - 26
VI-17 Upper Bound - Price Increases by
Process Segment and Establishment
Size - 1983 VI - 27
VI-18 Estimated Reductions from Baseline
Forecast Due to 1977 Alternative
A Effluent Guideline Limitations VI - 36
VI-19 Estimated Reductions from Baseline
Forecast Due to 1977 Alternate B
Effluent Guideline Limitations VI « 38
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TABLE NUMBER TITLE PAGE
VI-20 Cost of Major Pollution Control
Equipment for Selected Size
Metal Finishing Establishments VI - 41
VI-21 Estimate of Space Requirements
for Pollution Control
Equipment VI - 44
VI-22 Employment Increases Required
for Pollution Control - BPT VI - 46
VI-23 Pollution Control Capital
Investment Requirements for the
Metal Finishing Industry VI - 52
VI-24 Average Capital Expenditure
Requirements by Metal
Finishing Establishments VI - 53
VI-25 Market Share Trends in the
Metal Finishing Industry VI - 57
VI-26 Type of Treatment Process by
Level of Service Diversification VI - 59
VI-27 Summary of Calculated Earnings to
Average Capital Ratios VI - 65
VI-28 Summary of Calculated Earnings to
Average Capital Ratios VI - 67
VI-29 Profit as a Percent of Sales
Distribution of Metal Finishing
Industry Establishments VI - 70
VI-30 Number of Significantly Above
Average Profitable Firms in the
Metal Finishing Industry VI - 70
VI-31 Summary of Cash Flow/Debt
Retirement Coverage Ratios for
Metal Finishing Establishments -
Alternate A - 1977 VI - 74
VI-32 Summary of Coverage Ratios for
Metal Finishing Establishments -
1983 - Direct Dischargers VI - 76
VI-33 Closures and Growth Due to
Baseline Conditions VI - 78
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-XI-
TABLE NUMBER TITLE PAGE
VI-34 Alternate A Closure Analysis -
1977 VI - 81
VI-35 Alternate A Closure Analysis -
1977 VI - 83
VI-36 Additional 1977 Closures Due to
the 1983 "Spillover": Effect VI - 86
VI-37 Summary of Estimated Closures in
Relation to the 1967 Number of
Establishments VI - 87
VI-38 Estimated Increased Annual Costs
in the First Year of Enforcement -
Alternates A and B - 1977 VI - 91
VI-39 Estimated Increased Annual Costs
in the First Year of Enforcement -
1983 VI - 92
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ENVIRONMENTAL PROTECTION AGENCY
ECONOMIC ANALYSIS OF EFFLUENT GUIDELINES
METAL FINISHING INDUSTRY
LIST OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
1-1 Sources of Data
1-2 Industry Contacts
1-3 Metal Finishing Industry Statistics
SIC Code 3471, 1958-1972
1-4 Metal Finishing Industry Statistics
SIC Code 3479, 1958-1972
1-5 Metal Finishing Industry Statistics
SIC Codes 3471 and 3479, 1958-1972
1-6 Metal Finishing Establishments by SIC
Code and Establishment Size by Number
of Employees - 1967
1-7 End Uses of Metal Finishing Services
by Industry Segments
1-8 Metal Finishing Establishment Characteristics
by Process Type
1-9 Metal Finishing Establishment Characteristics
by Number of Employees
1-10 Value of Shipments in the Metal Finishing
Industry by Establishment Size and
Process Type - 1967
1-11 Number of Employees in the Metal Finishing
Industry by Establishment Size and
Process Type, 1967
1-12 Location of Metal Finishing Establishments
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— V1 1 1 —
EXHIBIT
NUMBER DESCRIPTION
1-13 Discussion Guide for Metal Finishing
Establishments
1-14 Discussion Guide for Metal Finishing
Customers
1-15 Metal Finishing Plants by Process
Segment and Type of Discharge
1-16 Correlation of Sales Volume and
Establishment Size by Number of Employees
II-1 Metal Finishing Financial Operating Data, 1973
II-2 Structure of a Typical Metal Finishing Shop
Income Statement by Firm Size - Percent
II-3 Structure of a Typical Metal Finishing Shop
Income Statement by Firm Size
II-4 Structure of a Typical Metal Finishing Shop
Balance Sheet by Firm Size
II-5 Financial Decision Criteria
II-6 Bank Interview Summary
IV-1 Examples of Measures of Future Impact
V-l Typical Metal Finishing Operations
V-2 Analysis of Ohio Metal Finishing Companies
by Type of Process
V-3 Common Characteristics of Plating Solution
V-4 Typical Process Flows
V-5 Battelle Columbus Laboratories Estimated
Investment Cost - BPT Technology
V-6 Annual Operations Costs - Alternate A
V-7 Adjusted Annual Operations Costs - Alternate B
V-8 BPT Annual Costs - Process Group A
Establishments
V-9 BPT Annual Costs - Process Group B
Establishments
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EXHIBIT
NUMBER DESCRIPTION
V-10 BPT Annual Costs - Process Group C
Establishments
V-ll BPT Annual Costs - Process Group D
Establishments
V-12 Pretreatment Annual Costs - Process
Group A Establishments
V-13 Pretreatment Annual Costs - Process
Group B Establishments
V-14 Pretreatment Annual Costs - Process
Group C Establishments
V-15 Pretreatment Annual Costs - Process
Group D Establishments
VI-1 Estimated Number of Metal Finishing
Establishments by Process Segment-
1977
VI-2 Estimated Number of Metal Finishing
Establishments by Process Segment-
1983
VI-3 1977 Forecast of Employment by Process
Segment and Establishment Size
VI-4 1983 Forecast of Employment by Process
Segment and Establishment Size
VI-5 1977 Forecast of Value of Shipments
by Process Segment and Establishment
Size
VI-6 1983 Forecast of Value of Shipments
by Process Segment and Establishment
Size
VI-7 Estimated First Year Impact on Dollar
Volume - Alternate A - 1977
VI-8 Estimated First Year Impact on Dollar
Volume - Alternate B - 1977
VI-9 Estimated First Year Impact on Dollar
Volume - 1983
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EXHIBIT
NUMBER DESCRIPTION
VI-10 Analysis of Incremental Changes in Annual
Pollution Control Costs by Adding Higher
Cost Processes for Ten Employee Establish-
ments
VI-11 Analysis of Incremental Chartes in Annual
Pollution Control Costs by Adding Higher
Cost Accesses for 47 Employee Establishment
VI-12 Profit Realization of a Typical Metal Finish-
ing Shop by Firm Size after Pollution Control
Process Plant Type A
VI-13 Profit Realization of a Typical Metal Finishing
Shop by Firm Size After Pollution Control -
Process Plant Type B
VI-14 Profit Realization of a Typical Metal Finishing
Shop by Firm Size After Pollution Control -
Process Plant Type C
VI-15 Profit Realization of a Typical Metal Finishing
Shop by Firm Size After Pollution Control -
Process Plant Type D
VI-16 Profit Realization of a Typical Metal Finishing
Shop by Firm Size after Pollution Control -
Municipal Dischargers - Process Plant Type A
VI-17 Profit Realization of a Typical Metal Finishing
Shop by Firm Size after Pollution Control -
Municipal Dischargers - Process Plant Type B
VI-18 Profit Realization of a Typical Metal Finishing
Shop by Firm Size after Pollution Control -
Municipal Dischargers - Process Plant Type C
VI-19 Profit Realization of a Typical Metal Finishing
Shop by Firm Size after Pollution Control -
Municipal Dischargers - Process Plant Type D
VI-20 Profit Realization of a Typical Metal Finishing
Shop by Firm Size After Pollution Control -
Direct Dischargers - Process Plant Type A
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EXHIBIT
NUMBER DESCRIPTION
VI-21 Profit Realization of a Typical Metal Finishing
Shop by Firm Size after Pollution Control -
Direct Dischargers - Process Plant Type B
VI-22 Profit Realization of a Typical Metal Finishing
Shop by Firm Size after Pollution Control -
Direct Dischargers - Process Plant Type C
VI-23 Profit Realization of a Typical Metal Finishing
Shop by Firm Size after Pollution Control -
Direct Dischargers - Process Plant Type D
VI-24 Profit Realization of a Typical Metal Finishing
Shop by Firm Size after Pollution Control -
Process Plant Type A
VI-25 Profit Realization of a Typical Metal Finishing
Shop by Firm Size after Pollution Control -
Process Plant Type B
VI-26 Profit Realization of- a Typical Metal Finishing
Shop by Firm Size after Pollution Control -
Process Plant Type C
VI-27 Profit Realization of a Typical Metal Finishing
Shop by Firm Size after Pollution Control -
Process Plant Type D
VI-28 Profit Realization of a Typical Metal Finishing
Shop by Firm Size after Pollution Control
VI-29 Profit Realization of a Typical Metal Finishing
Shop by Firm Size after Pollution Control
VI-30 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type A
VI-31 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type B
VI-32 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type C
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EXHIBIT
NUMBER DESCRIPTION
VI-33 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type D
VI-34 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type A
VI-35 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type B
VI-36 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type C
VI-37 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type D
VI-38 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type A
VI-39 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type B
VI-40 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type C
VI-41 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type D
VI-42 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type A
VI-43 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type B
VI-44 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type C
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EXHIBIT
NUMBER DESCRIPTION
VI-45 Ratio of Calculated Earnings to Average Capital
for the Metal Finishing Industry - Process
Plant Type D
VI-46 Summary of Calculated Earnings to Average
Capital Ratios -- Alternate A - 1977
VI-47 Summary of Calculated Earnings to Average Ratios
Alternate B - 1977 - Municipal Dischargers
VI-48 Summary of Calculated Earnings to Average Capital
Ratios -- Alternate B - Direct Dischargers
VI-49 Summary of Calculated Earnings to Average Capital
Ratios -- Alternate A - 1983
VI-50 Ratio of Earnings to Average Capital of Above
Average Metal Finishing Establishments --
Alternate A - 1977
VI-51 Ratio of Calculated Earnings to Average Capital
for the Above Average Metal Finishing
Establishments - Direct Dischargers -
Alternate B - 1977
VI-52 Ratio of Calculated Earnings to Average Capital
for the Above Average Metal Finishing Estab-
lishments
VI-53 Cash Flow/Debt Retirement Analysis — Alternate A
1977
VI-54 Cash Flow/Debt Retirement Analysis -- Alternate A
1977
VI-55 Cash Flow/Debt Retirement Analysis — Alternate A
1983
VI-56 Cash Flow/Debt Retirement Analysis -- Alternate A
1983
VI-57 1977 Closure Analysis - Alternate A
VI-58 1977 Closure Analysis - Alternate B
VI-59 1983 Closure Analysis
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EXHIBIT
NUMBER DESCRIPTION
VI-60 Projected Dollar Volume After Economic Impact
Adjustments - Alternative A - 1977
VI-61 Projected Dollar Volume After Economic Impact
Adjustments - Alternative B - 1977
VI-62 Projected Dollar Volume After Economic Impact
Adjustments - 1983
VI-63 Economic Analysis of Effluent Guidelines 1977
and 1983 - Metal Finishing Industry Summary
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ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF PLANNING AND EVALUATION
ECONOMIC ANALYSIS OF PROPOSED EFFLUENT GUIDELINES
METAL FINISHING INDUSTRY
EXECUTIVE SUMMARY
At the request of the Environmental Protection Agency
(EPA), A. T. Kearney, Inc. has conducted a study of the eco-
nomic impact of proposed effluent guidelines in the metal fin-
ishing industry. This Executive Summary provides an overview
of the study results. The details of the study and supporting
analysis and data will be found in the body of the report and
supporting appendices.
The study report is organized into seven sections:
I - Metal Finishing Industry Characteristics
II - Financial Characteristics of the Firms
in the Industry
III - Pricing Analysis
IV - Impact Framework
V - Technical and Cost Data Base
VI - Impact Analysis
VII - Limits of the Analysis
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SECTION I - METAL
FINISHING INDUSTRY
CHARACTERISTICS
The metal finishing industry was segmented by EPA into two
major groupings for purposes of effluent limitations and economic
analyses. The two groups consisted of:
The primary electroplating industry which includes
copper, nickel, chromium, and zinc platers.
Other electroplaters and metal finishing establish-
ments .
The second of these groupings includes the establishments
which are the subject of this impact assessment. These group-
ings fall entirely into Standard Industrial Classification (SIC)
Codes 3471 and 3479.
The establishments covered by this study can be segmented
by the primary services they provide as shown in the table below.
Process Segment Study Coverage(1)
Process Segment Number of Establishments
Cadmium Plating 109
Precious Metal Plating 152
Anodizing 362
Pickling 80
Phosphatizing 35
Etching 212
Total 950
Note: (1) All tables in the Executive Summary are derived
from the text. When these tables appear in the
text they are complete with appropriate footnotes
and sources of information.
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The proposed effluent limitation guidelines and standards
of performance for the metal finishing industry are applicable
only to plants which discharge effluents directly into navigable
water. These account for approximately 23% of the industry
establishments. Plants which discharge into publicly owned
wastewater treatment systems are not covered under the proposed
guidelines. These will be covered under a guideline scheduled
to be promulgated in the near future.
Demand for metal finishing services is generated by a re-
quirement for products with the physical properties which metal
finishing provides. The principal physical properties which
can be provided by the range of available metal finishing
processes are conductivity, corrosion resistance, durability
and decoration. Each metal finishing process covered in this
study provides one or more of these basic physical properties.
The potential for metal finishing final product substitu-
tion or import substitution due to increased costs is very
limited. The most likely category for product or import sub-
stitutions is fasteners.
The major industries using metal finishing services are
the aircraft, appliance, architectural, automotive, electronics,
fasteners, hardware, jewelry, nameplate, radio, small arms
components, steel forging and television industries.
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The estimated number of metal finishing establishments by
process type and plant size by number of employees is presented
in the table below.
Metal Finishing Establishments by Process
Type and.Plant Size by Number
of gmployees - 1967
Process Type
Establishment Precious
Size by Number Cadmium Metal
1-9
5-9
10-19
20-49
50-99
100-249
250-500(1)
Total
41
19
19
21
7
2
109
^^ - - - -
58
27
27
29
8
2
1
151
137
64
65
70
18
6
2
362
33
14
12
13
4
3
1
IP=
15
6
5
5
2
2
If
-i
H CM r~» m co r-.oo i
" C> CO CO CO
;
j
4
,rt
212
376
167
163
171
46
23
4
950
Note: (1) There are no metal finishing plants which employ over 500 personnel.
The small metal finishing establishments under 20 employees
dominate the market in number of establishments but not in mar-
ket share. Establishments with over 20 employees have a total
market share of over 7570.
The most important metal finishing industry size character-
istics, according to the 1967 Census of Manufactures, are sum-
mar iz-ed below:
Value of Shipments - $303.5 Million
Value Added by Establishment - $175.7 Million
Total Establishments - 950
Total Employment - 17,054
-------
- 5 -
Metal finishing plants are located in nearly all 50
states; however, the major concentration is in the principal
industrial areas in the Midwest, Northeast and Western seaboard.
Metal finishing establishments can be categorized by the
characteristics of their firms and plant operations. Metal
finishing plants are segmented by employment size, type of
process, and point of discharge for the analysis of economic
impact.
SECTION II - FINANCIAL
CHARACTERISTICS OF
THE FIRMS IN THE
INDUSTRY
A characterization of the financial position of firms in
the metal finishing industry by firm size has been developed.
This includes an estimate of average sales, current assets,
current ratio and working capital.
The average sales by employment size category range from
$53,700 to $6.5 million. The ratio of current assets to current
liabilities tends to increase with firm size. Thus larger
firms are financially stronger. The working capital also in-
creases with firm size, which indicates the small firm may be
at a relative disadvantage when investment flexibility is needed.
Variable costs and total operating costs as a percent of sales
increases with firm size. Fixed costs as a percent of sales
decreases with firm size. There appears to be competitive
pressures which affect the ability of the establishment owner
-------
- 6 -
to eliminate losses due to cost changes. Because the small
firms compete actively, increases in labor or material costs
are not always passed immediately to the buyers of metal finish-
ing services. This is especially true in the metropolitan
areas.
Profits as a percent of sales or assets vary with firm size.
The smaller firms have significant fluctuations in profits and
seem to be highly sensitive to the general economic environment.
Larger establishments have a more stable profit record and en-
joy a higher profit in terms of percent of sales. They are
also more capital intensive per unit of sales. It should be
noted that no specific pattern has been established with regard
to profitability according to type of metal finishing or spe-
cialization. Pro forma balance sheets and income statements
have been developed for each firm size category using a National
Association of Metal Finishers report and a Kearney survey.
These are used in determining financial criteria for the closure
analysis.
Two major factors found to affect profitability in many
establishments are the level of production obtained and the
ability to pass on increased costs.
A significant investment will be required for firms in the
metal finishing industry to comply with the proposed effluent
guidelines. Pollution control cannot be viewed as an ordinary
-------
- 7 -
investment; however, it must be evaluated as a financial in-
vestment since a firm's decision to remain open depends directly
on its ability to carry the burden of such an investment. The
following criteria are commonly used to evaluate financial data
associated with pollution control requirements:
1. Fixed cost-variable cost.
2. Rate of return.
3. Discounted cash flow.
While small metal finishing establishments are unlikely to
make sophisticated financing analyses, small entrepeneurs usually
have developed a pragmatic understanding for evaluating invest-
ment alternatives in their own circumstances.
Financing for both productive and nonproductive assets is
difficult in the metal finishing industry. Owners often have to
pledge assets of value equal to or greater than the amount of the
loan. Since most companies are small with low capital invest-
ment, the asset security can be a serious problem if pollution
control equipment costs approach the cost of present unpledged
assets.
The following alternative financing methods are evaluated
for generating capital:
1. Private funds
2. Sank loans.
3. SBA guaranteed loans.
-------
4. Public financing.
5. Governmental assistance.
It appears that bank loans will be the primary means of
raising for pollution control system investments in the metal
finishing industry.
SECTION III -
PRICING
ANALYSIS
The market for metal finishing services is very competitive
because services are basically undifferentiated and there are
no strong barriers to entry. In-plant metal finishing is also
an alternative. Kearney found primary purchasing decision
determinants are price, quality, completion schedule, delivery
service, and consistent performance.
Most metal finishing establishments attempt to price ser-
vices on the basis of current market prices. However, there
are methods for determining the production costs of operation
which the establishment owner uses to approximate market condi-
tions. The three basic pricing methods used are labor based
costing, equipment based pricing and area of surface plated.
Other important factors which enter into the pricing of metal
finishing services are available production capacity and quality
requirements.
-------
- 9 -
SECTION IV -
IMPACT
FRAMEWORK
An economic framework must be established in order to
analyze the economic impact of the proposed effluent guidelines.
This framework is based on the characteristics of the metal
finishing industry, institutional considerations of the domestic
economy and financial and economic analytical models.
The framework established for impact assessment is based
on key economic assumptions and dynamics. The development of
economic impact assessment is based on market conditions, opera-
tional impacts, effects on customers and suppliers, capital in-
vestment and financing, micro impacts and a closure model.
The market for metal finishing services is very competitive.
There are no significant barriers to entry. Kearney estimates
that firms which represent 8070 or more of total industry capac-
ity with the lowest costs will collectively determine the mar-
ket price. Thus segments of the industry with higher than
average costs for pollution control can be severely impacted
with a large number of potential closures.
SECTION V -
TECHNICAL AND
COST DATA BASE
Water use and extent of effluent discharge varies by the
specific metal finishing process involved. The types of metal
finishing processes which are important for the analysis of
-------
- 10
economic impact in this study are:
Chemical Surface Preparation and
Finishing Processes
Electroplating processes
Corrosion Coating and Special
Surface Finishing
Pickling falls into the chemical surface preparation and
finishing processes category. Cadmium plating and precious
metal plating falls into the electroplating processes category.
Anodizing, phosphatizing, and etching fall into the corrosion
coating and special surface finishing category.
Process flows in most metal finishing plants follow a
series of routine steps. Each of the processes of interest in
this study requires specific process steps. However, most in-
clude precleaning followed by finishing. Depending on the final
finishing to be attained, the material is subjected to one or
several intermediate treatments and subsequent rinsings.
Water pollution in metal finishing plants comes from seven
major sources:
Drag-in solutions.
Drag-out solutions.
Accidential spills and leaks.
Intentional dumpings.
Losses due to equipment cleaning.
Cooling water.
Wash water from ventilation system.
-------
- 11 -
Sources of pollution in a typical plant are numerous, yet
some can be controlled and others can be eliminated with little
cost impact. However, the major portion of discharged wastes
require costly processes to meet either local standards or pro-
posed or existing Federal Standards.
It appears that as long as cost of water remains low in
relation to treatment methods, and municipalities accept efflu-
ents with low concentrations, dilution may continue to occur
from many establishments especially the small establishments
with low visibility (from regulatory agencies). Most plants do
not treat waste waters at all, and depend upon other wastes
already in municipal systems to provide the dilution factor.
Typically these are small plants where visibility is not high, and
volumes of discharge are not great. Under the effluent limitation
guidelines, dilution will no longer be an available approach to
pollution abatement.
Treatment methods commonly used in metal finishing plants
range from well-known and proven technology to fairly new and
sophisticated systems. These are dilution, chemical destruction,
evaporative recovery, ion exchange, and reverse osmosis.
Proposed effluent limitation guidelines and associated
costs have been developed for the metal finishing industry by
Battelle Columbus Laboratories. The guidelines developed by
Battelle Columbus Laboratories, in the proposal stage apply to
existing and new source direct dischargers. Pretreatment
-------
- 12 -
guidelines will also be proposed for municipal dischargers.
Two alternate pretreatment standards have been assumed for im-
pact analysis.
The proposed effluent limitations for establishments in
the metal finishing industry constructed prior to promulgation
of regulations cover two levels of treatment.
Best Practicable Technology Currently
Available (BPT) - 1977
Best Available Technology Economically
Achievable (BAT) - 1983
New source performance standards will apply to metal fin-
ishing establishments constructed after proposal of regula-
tions. New sources are required to achieve exactly one-half
the values for each pollutional characteristic required for
existing sources.
EPA, through its effluent guidelines contractor, has pro-
vided the capital equipment costs and variable operating costs
for meeting BAT and BPT effluent limitations. Costs have been
scaled to model plants based on size of employment. The average
employment sizes are 5, 10, 20, and greater than 20 employees
(47 employees). Four process types were developed for each
plant size. These processes are discussed below.
Plant A includes metal finishing processes in which
no cyanides or chromium compounds are used. This plant con-
figuration would require precipitation of heavy metals,
-------
neutralizing and clarification of waste vaters pjior to .is-
charge.
Plant B includes metal finishing processes in wh-el.
cyanides are present along with other cleaning, dipofng r.;i-
plating baths. This plant would require oxidation of cyan des
in addition to precipitation, neutralization and clarification
of wastewaters prior to discharge.
Plant C includes metal finishing procc >s*cc. in which
chromium is present along with non-cyanide waste*.. "'rec- Irnenr
for these processes would require chromium redoctic i, ac";'• •'< and
alkaline rinse neutralization, heavy metal precipit -icion -j^a
clarification of wastewateis prior to discharge..
Plan t D includes metal finishin?', processes invoiv:t.0
cyanides and chromium wastes. These processes wouid require
cyanide oxidation, chromium reduction, . eutralizutivn of ac/.d
and alkali rinses, heavy metal precipitation and clarification
of wastewaters prior to discharge.
Each process type described above is related to a different
pollution control cost level. Pollution control co'.ts pro; "e: •
sively increase from Process Type A to P"nc.ess Tvpo D.
Process segments are made up of plar.t.s wit*'! ifaryinc 'i;--
grees of diversiiication depending on the type, of in-'tal T".u-
ishing operations performed. On this basis there if a lan^t
of proces:. p :uit typ.-s for each rirnces:; segment / lowev r-jct
upper boun 1 Lor this range can p-.- e.-j • ah iished fc- ."-.ch ••/."•,• e.-,^
-------
- 14 -
segment depending on the minimum diversification associated
with the primary operation and maximum diversification associated
with the secondary operations. The table below presents the
lower and upper bounds of process plant types for each process
segment.
Lower and Upper Bounds of Process Plant
Type for Each Process Segment
Process Plant Type
Process Segment Lower BoundUpper Bound
Cadmium Plating B D
Precious Metal Plating B B
Anodizing A C
Pickling A A
Phosphatizing A C
Etching A A
An alternative set of costs is associated with only the
municipal metal finishing establishments. Costs have been cal-
culated to exclude clarification technology for municipal dis-
chargers whose unclarified effluents may be treated with other
municipal wastes in the municipal treatment plant. The dis-
cussion in this section will make the following distinction
between BPT costs.
1. Alternate A assumes all industry establishments
must treat to BPT requirements. Both direct and municipal dis-
chargers will have full BPT costs including clarification.
2- Alternate B will differentiate between direct
dischargers and municipal dischargers. Direct dischargers will
have costs for BPT technology as in Alternate A. However,
municipal dischargers will have costs for chemical treatment
-------
- 15 -
only; clarification technology costs will be eliminated.
The discussion on costs is covered under the following
subject headings:
- BPT Capital Equipment Costs - Alternate A - 1977.
- BPT Annual Operating Costs - Alternate A - 1977.
- BPT Capital Equipment Costs - Alternate B - 1977.
- BPT Annual Operating Costs - Alternate B - 1977
- BAT Capital Equipment Costs - 1983.
- BAT Annual Operating Costs - 1983.
The model plants and their costs have been applied to in-
dustry segments as shown in the table below to project costs in
accordance with establishment size categories by number of em-
ployees .
Relationship of Model Plant Size and
Industry Establishment Segments
,-,^ Industry Establishment
Model Plants ( } Segments (2)
Employees
Employees
5
10
20
20 + (47)
(3)
(3)
(3)
Notes: (1) As designed by Battelle Columbus Laboratories.
(2) As designed by the Census of Manufactures.
(3) Sizes not developed.
Range
1- 4
5- 9
10-19
20-49
50-99
100-249
250 or more
Average
2
7
14
30
67
140
350
-------
- 16
BPT Alternate A - 1977 capital equipment costs range from
$33,460 to $2.6 million depending on firm size and process
group segment. Annual operating costs range from $10,255 to
$1.0 million. BPT Alternate B pretreatment capital equipment
costs range from $21,785 to $2.2 million. Annual operating
costs range from $8,503 to $.97 million. BAT 1983 capital equip-
ment costs range from $28,742 to $2.2 million. Annual operating
costs range from $8,809 to $.88 million.
SECTION VI -
IMPACT
ANALYSIS
(a) Baseline
Forecast
To determine the economic impact of the proposed effluent
guidelines on the metal finishing industry, a baseline industry
forecast is developed. This forecast projects industry condi-
tions without consideration to the impacts of environmental
control. The impacts arising from enforcement of the effluent
guidelines in 1977 and 1983 are then measured against this base.
The growth of the metal finishing industry is directly re-
lated to the growth of the industries using metal finishing
services. Using Department of Commerce industry projections
and projecting current economic trends in the metal finishing
industry, a baseline forecast is developed as discussed in de-
tail in Section VI-A and Appendix C.
-------
- 17 -
Forecasts of the number of establishments, employment and
value of shipments for the metal finishing industry in 1977 and
1983 are summarized in the table below.
Forecast of Establishments, Employment and Value
of Shipments in the Metal Finishing Industry
Year
1967
1977
1978
(b)
Establishments Employment
950 17,054
960 20,750
951 24,309
Market Price
Impact
Value of Shipments
(? Million)
$382.7
522.8
687.0
The adjustments to the market for metal finishing services
brought about by the effluent guidelines depend on the costs in-
curred, resulting price increases, and the price elasticity of
demand for metal finishing services. Changes in the metal
finishing market can only be quantified after such demand and
supply factors have been established.
Pollution control requirements will significantly increase
the annual operating costs of firms within the metal finishing
industry. These additional costs must be absorbed or passed on
as price increases. Cost absorption is not possible for the
small establishment and the ability of larger plants to absorb
part of the pollution control cost is questionable. Thus, price
increases will be required in order to recoup the costs incurred
due to pollution control requirements.
-------
- 18 -
Market price increases associated with 1977 - Alternate A
range from 12.5% to 16.1% depending on process segment and
extent of establishment diversification assumed in costing.
Similarly, market price increases associated with 1977 - Alter-
nate B range from 12.2% to 15.8%.
The 1977 pretreatment standard for municipal dischargers
will not be changed in 1983. Therefore, only direct dischargers
will have increased costs. Approximately 7770 of the metal fin-
ishing plants are municipal dischargers and 23% are direct dis-
chargers . These plants are generally in competition with each
other. By 1983, municipal dischargers will represent 80% or
more of the industry capacity. On this basis, the municipal dis-
chargers will determine the market price based on their cost
levels. No market price increases over those required to meet
the 1977 standards will be necessary for municipal dischargers
to recoup the annual costs for meeting pretreatment standards
In 1983 since treatment costs will be unchanged from the 1977
level. Therefore, the 1983 market price is estimated at the
same level as for the 1977 standards.
The impact on industry volume of increased prices depends
on the price elasticity of demand for metal finishing services
The availability of substitutes, import competition and captive
plant alternatives is limited. Therefore, the market can be
considered very inelastic for price increases within the range
-------
- 19 -
estimated. Based on the qualitative information available,
Kearney estimates a range for the price elasticity of demand
of -.3 to -.1 and the midpoint is used to determine the impact
on industry volume.
c) Impact
Assessment
It has been assumed that pretreatment costs for plants dis-
charging into municipal systems will be the same in 1983 as in
1977. Currently, no EPA decision has been made to make pretreat-
ment standards more strict in 1983 (i.e., similar to BAT).
The development of the economic impact assessment is divided
into nine segments.
1. Volume Impact. The price elasticity of demand
estimates measuring the reaction of the market to a price increase
were used to relate the change in volume to the change in price.
Estimates of dollar volume reductions from the baseline forecast
are indicated in the table below.
Summary of Estimated First Year
Reduction from Baseline Forecast
Reduction from Baseline Forecast
Year Lower Bound Upper Bound
(? Millions) (? Millions)
1977 - Alternate A $13.5 $14.1
1977 - Alternate B 13.0 13.7
1983 - Incremental to A, 1977 0 0
There is no "new" impact on total market volume esti-
mated for 1983 because the overall market price for 1983 is not
estimated to change significantly. On a similar basis, each
year's volume in the future is estimated to decline from the
forecasted level. Even with these reductions, the metal finish-
ing industry volume is expected to continue to increase
-------
s~ -'f\ :-"itl~r f--.r curler:*- levels.
2. Op e ••• a t i on a 1 Imp a c t o . 7fv nropcsed effluent gul r1 ~ •
lines wi-'l result in introducing new technologies into the in-
dustry , Treatment equipment will require knowledge of wa*'ei
treatment which is new technology for metal finishing plants.
Cost of making these technology changes will also be considerably
higher than has been experienced in the past by this industry.
Annual costs including labor, supplies, and maintenance will
increase. Plant size will have to be increased and process lines
rearranged for optimal use of waste water treatment systems.
Additional employees will have to be hired to operate pollution
control equipment.
3. Customers and Suppliers. Impacts on customers and
suppliers will occur because of changed market conditions and
adjustments required in metal finishing operations. The primary
impact on metal finishing customers will be the higher price
charged for metal finishing services. Most customers will con-
tinue to purchase paying the higher prices. However, a small
percentage of customers will react by installing their own metal
finishing operation or seek out substitute products. Some metal
finishing operations will discontinue secondary operations and
specialize. This may result in customer problems in obtaining
metal finishing services.
The proposed effluent guidelines will result in an
increase in demand for pollution control equipment. Some metal
-------
- 21
finishing establishments might pot .-a nble to obtain the nc c >? -
sary pollution control equipment b/ 1977 if supplier conditions
are tight.
4. Capital and Invesr.mcnt Financing. The need to
finance pollution control investments may result in adverse
affects on the metal finishing industry. The funds required for
pollution control investment are substantially higher than the
current average annual expenditure. This abrupt adjustment of
financing patterns may create difficulties in funding.
5. Micro-Impacts. The technical and cost information
developed by Battelle Columbus Laboratories indicates that there
are definite economies of size in pollution abatement. These
are diseconomies for small size firms which arise from the min-
imum size treatment system which can be made available under
present technology. Also the information indicates that there
are economies to waste stream specialization in pollution abate-
ment cost. These economies arise because the treatment costs
for diversified waste streams are higher than those from metal
finishing establishments specializing in specific metal finish-
ing processes. Institutionally, there are effective economies
of size in financing. TLi r; occurs in terms of both cost and
availability of funds. TV:>se factors which impact small firms
adversely are built into the closure impact analysis.
-------
- 22 -
6. Closure Analysis. Individual firms may be severely
impacted by pollution control requirements. To assess this impact
a model has been utilized relating closures to earnings, financing,
and price increases. Within each establishment size category a
financial model for the "average" or typical establishment has
been developed. Utilizing the model pro forma income statements
and the estimated market price increases, each establishment size
and process category has been analyzed with respect to the expect-
ed pollution control costs. Low earnings size categories are
expected to close. Financing capability is then reviewed on the
basis of cash flow versus amortization requirements. The firms
with marginal cash flow capability to finance pollution control
expenditures are expected to close. Establishments with potential
of achieving above average price increases due to competing in
specialized services and/or geographically isolated markets are
separately evaluated in the closure analysis.
7. Closure Decision. The closure decision by firms
faced with changing market conditions and a large investment in
relation to current levels will reflect their assessment of long-
term prospects to continue to be a viable operation under these
new conditions.
Planning will reflect consideration of the impact of
the complete program of effluent regulation at the time the initial
decisions are made to invest substantial funds. The 1983 require-
ments will be considered in making the 1977 investment decision to
meet the BPT guidelines.
-------
- 23 -
Careful consideration will be given to the advan-
tages of the alternatives available when staying in the market.
(a) Invest in a completely new facil-
ity to obtain efficiencies avail-
able with new equipment since
treatment system costs are so
large in relation to current fixed
investment.
(b) Move to a municipal system to
avoid direct federal regulation
and stringent 1983 guidelines even
though new source standards will
require investment to conserve on
water use.
(c) Specialize in services to avoid
the more costly investment re-
quired to treat diverse waste
streams.
(d) Merge, buy, sell or otherwise
grow to a more viable size firm
to take advantage of the economies
of scale associated with treatment
systems.
8. Closure Estimates. Closure estimates reflect the
fact that analysis indicated the impact of the 1983 effluent
limitation guidelines would be on the 1977 investment and closure
decisions. Establishments unable to make a profit or finance
replacement of treatment systems based on the 1983 guidelines will
be forced to close or plan investments in 1977 in such a way as
to be profitable in 1983. Many may move to municipal systems
and meet new source standards. The 1983 impact on 1977 closures
is designated as a "spillover" impact. The estimated closures are
summarized in the table on the following page.
-------
La. 'jiKte. Closui -\s Duo Co I,.1
n^ i ctCxon ,'uideli iss of 1977
n
Est .bin rmert-
Sii >i by lyunL-e
of Employees
1977 Effluent
\. uideline
Closures
1983 EffJh - :
Guideli- •
"Spillover"
Closures
ToLdi Closures
in 1977
1- 4
5- 9
10- 19
20- 49
50- 99
100-249
250-499
Total
Lower
bound
b8
25
0
0
0
0
0
93
Upper
Bound
173
64
16
0
0
0
0
256
Lower
Bound
32
15
24
25
5
2
0
103
Upper
Sound
19
11
22
25
5
2
0
84
Lowe r
Bound
100
40
24
25
5
2
0
196
Upper
Bound
193
75
38
25
5
2
0
340
Note that the estimated closure effect of the 1983 efflu-
ent guidelines extends into the larger metal finishing establish-
ments with a significant number of closures in establishments witn
20 or more employees.
Closures as a percent of 1967 establishments are sum-
marzied in the table on the following page.
-------
Summary of Estimated Closures in
Relation to die 1967 Number of EstablisLrueuU
Establishment Size
by Number of '
Employees
1- 4
5- 9
10- 19
20- 49
50- 99
100-249
250-499
Total
The Range of Closures as a Fer,:ent:
1967 Estab! Jshment^
Direct
Discharger
56%- 70%
53
65
63
45
50
0
-66
-68
-63
-45
-50
- 0
577o-657o
Muni
Disc
cipal
hdrger
18%- 46%
16 -
0 -
0 -
0 -
0 -
0 -
10%-
39
10
0
0
0
0
27%
: Oi
Total
27%-
24 -
15 -
15 -
11 -
9 -
0 -
21%-
51%
45
23
15
11
9
0
36%
Note that the estimated total closure impact on the in-
dustry is significant ranging from 21% to 36% of the number of
establishments in tne industry in 1967.
The direct discharger segment of the industry is severely
impacted by closure. Closure estimates for this segment range
from 5770 to 6570 of all 1967 establishments. In addition, there
is a large impact on plants with over 20 emplo/ees in this segment
of the industry.
9. Employment/Capacity Impact. The einploymenc
impact of closures is difficult to estimate. From 12.8% to 16.570
of industry capacity will close. Municipal dischargers and larger
size establishments are expected to take short- and long-term
steps to expand to handle the total industry volume. Thus,
-------
- 26 -
total industry employment is not likely to change significantly
from the baseline forecast estimates. However, it is apparennt
some dislocations will occur. In total, closures will eliminate
approximately 2,200 to 2,800 jobs. Some of these employees will
be able to move to expanding establishments in their economic
region; however, others will undoubtedly be required to find
employment in other industries. The absolute number of jobs
concerned is so low that it is unlikely that more than a few
communities would have a significant unemployment impact.
10. Annual Costs. The analysis of the cost of resources
required to meet the proposed effluent guidelines indicates that
increased annual costs over the 1973 level will be significant.
Total increased 1977 annual costs range from $63.8 million to $68.4
million. Total increased 1983 annual costs range form $86.0 mil-
lion to $89.8 million (full cost not incremental to 1977). The
cost increases over time due to expanding industry volume.
11. Other Impacts. Neither foreign trade nor local or
regional economies will be significantly impacted by the effluent
guidelines in the metal finishing industry.
SECTION VII - LIMITS
OF THE ANALYSIS
The economic impact analysis has known limitations. These
limitations are based on the accuracy of information utilized,
major assumptions, and correctness of key economic parameters
estimated.
-------
- 27 -
Accuracy of the economic impact analysis is directly depen-
dent on the accuracy of information gathered pertaining to the
metal finishing industry.
The assessment of the economic impact of the proposed efflu-
ent guidelines is based on a set of assumptions. These assumptions
have a direct bearing on the results of the study.
Economic parameters used in financial and economic analytical
models have been estimated based on the information available.
They are believed to be correct and reasonable by Kearney; however,
insofar as they are significantly different from actual market
conditions, the impact assessment would have to be modified accord-
ingly.
SUMMARY OF
IMPACT ASSESSMENT
A detailed summary of the impact of BPT and BAT effluent
guidelines on the metal finishing industry is shown on the fol-
lowing pages. Impact estimates are presented by direct and
municipal discharger and by size category of the industry.
-------
Segment:
Range of Employees
Average Sales Volume
SIC Code
Total Plants in the Metal Finishing Industry
Number of Plants in Municipal Discharger Segment-1967
Percent of Total Plants in Municipal Discharger Segment
Number of Plants in 1977 Baseline
1983 Baseline
Number of Plants with BPT Treatment in Place^
Cost of Pollution Abatement
Total Capital Cost ($000,000)
"1977 - Alternate A"(2)
1983(3)
Average Annual Investment ($000,000)(4)
"1977 - Alternate A"
1983
Average Annual Investment with Pollution Control(5)
"1977 - Alternate A" ($000,000)
1983
Total Capital Expenditures as
Percent of Capital(6)
Annualized Costs for Segment
Incremental Increases including Capital Charges ($000,000)
"1977 - Alternate A"(7)
1983(8)
Incremental Increases excluding Capital Charges ($000,000)
"1977 - Alternate A"(9)
1983(10)
Incremental Increases including Capital Charges
as a Percent of Sales
"1977 - Alternate A"(11)
1983(13)
Expected Price Increases Due to Pollution Control (Percent)
"1977 - Alternate A"(14)
1983(15)
Plant Closures
Total Closures Anticipated
"1977 - Alternate A"(16)
1983(17) "Spillover" Effect
Percent Reduction of Size Segment Capacity Due to Closure(18)
"1977 - Alternate A"
1983 "Spillover" Effect
Employment
Total Number of Employees Affected(ly)
"1977 - Alternate A"
1983 "Spillover" Effect
Percent of Total Employees in Size Segment(20)
"1977 - Alternate A"
1983 "Spillover" Effect
Community Effects Impact on Industry Gr
"1977 - Alternate A"
1983 "Spillover" Effect
Balance of Trade Effects1^22'
ECONOMIC ANALYSIS OF EFFLUENT GUIDELINES
1977 AND 1983 - METAL FINISHING INDUSTRY SUMMARY
MUNICIPAL DISCHARGER
Industry
A
1-4
$ 53,730
3471
3479
376
290
39.67.
252
191
N/A
$ 8.4-15.5
-0-
$ .09
.07
§ .93-1.64
-0-
1227.-1877.
$ 2.6-4.2
-0-
$ 1.3-1.9
-0-
19.17.-31.37.
-0-
12.5%-16.17.
-0-
51-133
-0-
17. 97.- 45. 97.
-0-
104-266
-0-
2 17.- 5 27.
-0-
Minor
None
None
B
5-9
$ 146,290
3471
3479
167
129
17.67.
107
89
N/A
$ 5.3- 8.8
-0-
$ .42
.34
$ .95-1.30
-0-
1137.-1877.
$ 2.5-4.0
-0-
S 1.7-2.7
-0-
15.8-25.47.
-0-
12.5X-16.1S;
-0-
20-50
-0-
15.57.-38.87.
-0-
140-350
-0-
167.-417.
-0-
Minor
None
None
C
10-19
$ 284,670
3471
3479
163
126
17.27.
149
177
N/A
S 9.7-15.2
-0-
$ 1.89
2.26
$ 2.86-3.41
-0-
797.-1317.
$ 5.8-8.3
-0-
$ 4.3-6.0
-0-
13.77.-19.6X
-0-
12.57.-16.17.
-0-
0-13
-0-
0-10.37.
-0-
0-182
-0-
0-107.
-0-
Minor
None
None
Size Segment Codes
D
20-49
$ 600,000
3471
3479
171
131
18.07.
161
191
N/A
$49.1-55.4
-0-
$ 3.50
4.13
$ 8.41-9.04
-0-
1497.-1687.
$ 15.2-18.9
-0-
$ 7.8-10.6
-0-
15.77.-19.67.
-0-
12.57.-16.17.
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
Mlnor
None
None
E
50-99
$ 1,263,000
3471
3479
46
35
4.85
45
52
N/A
$19.6-22.2
-0-
$ 2.62
3.10
$ 4.58-4.84
-0-
1117.-1257.
$ 6.7-8.9
-0-
$ 3.8-5.6
-0-
11.97.-15.67.
-0-
12.57.-16.17.
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
Minor
None
None
F
100-249
$ 2,940,000
3471
3479
23
19
'. 2.47.
22
25
N/A
$20.0-22.5
-0-
$ 3.79
4.63
$ 5.79-6.04
-0-
7 87.- 847.
$ 6.9-9.1
-0-
$ 14.9-19.8
-0-
10.67.-14.07.
-0-
12.57.-16.17.
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
Minor
None
None
G
250 and Over
$ 6,566,000
3471
3479
4
3
.47.
4
6
N/A
$ 9.1-10.2
-0-
$ 1.31
1.94
$ 2.22-2.33
-0-
N/A
$ 3.1-4.1
-0-
$ 14.9-16.0
-0-
11. 97.- 15. 67.
-0-
12.57.-16.17.
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
None
None
None
Total
$53,730-$6,566,000
3471
3479
950
733
1007.
740
731
N/A
$121.2-149.8
-0-
$ 13.62
16.47
$25.74-28.60
-0-
11 87.- 13 97.
$ 42.8-57.5
-0-
$ 35.4-43.5
-0-
_
12.57.-16.17.
-0-
72-196
-0-
9. 87.- 26. 77.
-0-
244-798
> -0-
27.- 67.
-0-
Minor
None
None
(Please see Page 4 for footnotes.)
-------
ECONOMIC ANALYSIS OF EFFLUENT GUIDELINES
1977 AND 1983 - METAL FINISHING INDUSTRY SUMMARY
Segment:
Range of Employees
Average Sales Volume
SIC Code
Total Plants in the Metal Finishing Industry
Number of Plants in Direct Discharger Segment-1967
Percent of Total Plants in Direct Discharger Segment
Number of Plants in 1977 Baseline
1983 Baseline
Number of Plants with BPT Treatment in Place (1)
Cost of Pollution Abatement
Total Capital Cost ($000,000)
1977 - Alternate A (2)
1983 (3)
Average Annual Investment ($000,000)(4)
1977 - Alternate A
1983
Average Annual Investment with Pollution Control(5)
1977 - Alternate A $(000,000)
1983
Total Capital Expenditures as
Percent of Capital in Place(6)
Annualized Costs for Segment
Incremental Increases including Capital Charges ($000,000)
1977 - Alternate A
1983 (8)
Incremental Increases excluding Capital Charges ($000,000)
1977 - Alternate A (10)
1983 (10)
Incremental Increases including Capital Charges
as a Percent of Sales
1977 - Alternate A (11)
1983 (12)
Expected Price Increases Due to Pollution Control (Percent)
1977 - Alternate A (14)
1983 (15)
Plant Closures
Total Closures Anticipated
1977 - Alternate A (16)
1983 - "Spillover Effect" (17)
Percent Reduction of Size Segment Capacity Due to Closure (18)
1977 - Alternate A
1983 - "Spillover Effect"
Employment
Total Number of Employees Affected (19)
1977 - Alternate A
1983 - "Spillover Effect"
Percent of Total Employees in Size Segment (20)
1977 - Alternate A
1983 - "Spillover Effect"
Community Effects Impact on Industry Growth (21)
1977 - Alternate A
1983 - "Spillover Effect"
Balance of Trade Effects (22)
DIRECT DISCHARGEES
Industry Size Segment Codes
A
1-4
$53,730
3471
3479
376
86
39.67.
76
56
N/A
$2.5-4.7
1.6-3.0
$.03
.02
$.28-. 50
.18-. 32
2277.- 34 7%
$.8-1.2
• 5- .8
$.4-. 5
.3-. 3
19. 17.- 3 1.37.
16. 47.- 2 7. 07.
12. 57.- 16. 17.
0
16-41
19-32
18.67.-47.77.
5 3. 37.- 54. 37.
32-82
38-64
2 17.- 547.
2S7.-427.
Minor
Minor
E
5-9
$146,290
3471
3479
167
38
17.67.
33
27
N/A
$1.6-2 7
1 1-1.9
$.12
.10
$.28-. 39
21-. 29
2 107.- 3477.
$.8-1.2
.5- .9
$.6-. 8
.2-. 5
15. 87.- 2 5. VI.
13. 37.- 2 1.87.
12 . 57.- 16 . 17.
0
5-14
11-15
13. 27.- 36. 87.
53.67.-57.97.
35- 98
77-105
147.- 3 87.
307.-417.
Minor
Minor
C
10-19
$284,670
3471
3479
163
37
17.27.
44
53
N/A
$2.9-4.5
3.0-4.6
$.57
.67
$.86-1.02
.97-1.13
14 87.- 2447.
$1.7-2.5
1.9-2.5
$1.3-1.7
1.1-1.4
13. 77.- 19. 67.
11. 97.- 16. 97.
12. 57.- 16. 17.
0
0-3
22-24
07.- 8.17.
53. 77.- 54. 67.
0- 42
308-336
07.-407.
2 77.- 307.
Minor
Minor
D
20-49
$600,000
3471
3479
171
40
18 . 07.
48
58
N/A
$14.6-16.5
15.2-17.2
$1.00
1.23
$2.46-2.65
2.75-2.95
2777.-3127.
$4.5-5.7
4.7-5.9
$2.3-3.2
1.7-2.4
15 . 77.- 19 . 67.
13 . 57.- 16 . 87.
12. 57.- 16. 17.
0
0
25
0
52 . 17.
0
750
0
627.
Minor
Minor
E
50-99
$1,263,000
3471
3479
46
11
4.87.
12
15
N/A
$5.2-5.9
5.6-6.4
$.78
.98
$1.30-1.37
1.49-1.57
2067.-233%
$1 8-2.4
1 9-2.5
$1.0-1.5
.8-1.1
11. 97.- 15. 67.
10. 27.- 13. 47.
12. 57.- 16. 17.
0
0
5
0
41.77.
0
335
0
487.
Minor
Minor
F
100-249
$2,940,000
3471
3479
23
4
2.47.
5
8
N/A
$4.6-5.1
6.3-7.0
$1.13
1.38
$1.59-1.64
2.01-2.08
1457.
$15.6-20.6
2.1- 4.5
$3.9-5.7
1.0-2.7
10. 67.- 14. 07.
9. 17.- 12. 17.
12. 57.- 16. 17.
0
0
2
0
40.07.
0
280
0
387.
Minor
Minor
G
250 and Over
$6,566,000
3471
3479
4
1
.47.
2
3
N/A
$4.6-5.1
5.9-6.6
$.39
.58
$ .85- .90
1.17-1.24
N/A
$15.6-16.8
2.0- 2.7
$1.7-2.6
.8-1.9
11. 97.- 15. 67.
5. 67.- 13. 57.
12 . 57.- 16 . 17.
0
0
0
0
0
0
0
0
0
None
None
Total
$53,730-$6,566,000
3471
3479
950
217
1007.
220
220
N/A
$36.0-44.5
38.7-46.7
$4.02
4.91
$7.62-8.47
8.78-9.58
2277.- 256Z
$40.8-50.4
13.6-19.8
$24.5-35.1
5.9- 9.7
_
-
21-58
84-103
10. 17.- 26. 77.
51.57.-51.87.
67-222
1788-1870
27.- 107.
467.-4S7.
Minor
Minor
(Please see Page 4 for footnotes.)
-------
Segment:
Range of Employees
Average Sales Volume
SIC Code
Number of Plants in Size Segments 1967
Percent of Total Industry Plants
Number of Plants in 1977 Baseline
1983 Baseline
Number of Plants Direct Discharging
Percent of Total Industry Plants
Percent of Plants in Size Segments
Number of Plants with BPT Treatment in Place
Cost of Pollution Abatement
Total Capital Cost ($000,000)
"1977 - Alternate A'1 (2)
1983(3)
Average Annual Investment ($000,000)(4)
"1977 - Alternate A"
1983
Average Annual Investment with Pollution Control^)
"1977 - Alternate A" ($000,000)
1983
Total Capital Expenditures as
Percent of Capital(6)
Annualized Costs for Segment
Incremental Increases including Capital Charges ($000,000)
"1977 - Alternate A"(7)
1983(8)
Incremental Increases excluding Capital Charges ($000 000)
"1977 - Alternate A"(10)
1983(10)
Incremental Increases including Capital Charges
as a Percent of Sales
"1977 - Alternate A"(11)
1983(13)
Expected Price Increases Due to Pollution Control (Percent)
"1977 - Alternate A"(14)
1983(15)
Plant Closures
Total Closures Anticipated
"1977 - Alternate A"(16)
1983 "Spillover Effect"(17)
Percent Reduction of Size Segment Capacity Due to ClosureSS)
"1977 - Alternate A"
1983 "Spillover Effect"
Employments^)
Total Number of Employees Affected
"1977 - Alternate A"
1983 "Spillover Effect"
Percent of Total Employees in Size Segment^20)
"1977 - Alternate A"
1983 "Spillover Effect"
Community Effects Impact on Industry Growt
"1977 - Alternate A"
1983
Balance of Trade Effects^ '
ECONOMIC ANALYSIS OF EFFLUENT GUIDELINES
1977 AND 1983 - METAL FINISHING INDUSTRY SUMMARY
DIRECT AND MUNICIPAL DISCHARGERS
Industry Size Segment
A
1-4
$ 53,730
3471
3479
376
39.67.
328
247
86
9.17.
237.
N/A
$ 10.9-20.2
1.6-3.0
$ .12
.09
$ 1.21-2.14
.18-. 32
1227.- 34 77.
$ 3.4-5.4
.5-. 8
$ 1.8-2.4
.3-. 3
19.17.-31.37.
16.47.-27.07.
12.57.-16.17.
-0-
68-174
19-32
18.67.-47.77.
12.37.-12.37.
136-348
38-64
20.67.-52.87.
5. 87.- 9. 77.
Minor
Minor
B
5-9
$ 146,290
3471
3479
167
17.67,
140
116
38
4.07.
237.
N/A
$ 6.9-11.5
1.1-1.9
$ .54
.44
$ 1.23-1.69
.21-. 29
1137.-3477.
$ 3.3-5.2
.5-. 9
$ 2.3-3.5
.2-. 5
15.87.-25.47.
13.67.-21.87.
12.57.-16.17.
-0-
25-64
11-15
13.27.-36.87.
13.07.-14.57.
175-448
77-105
15.67.-40.07.
6. 97.- 9. 47.
Minor
Minor
C
10-19
$ 284,670
3471
3479
163
17.27.
193
230
37
3.9%
237.
N/A
$ 12.6-19.7
3.0-4.6
$ 2.46
2.93
$ 3.72-4.43
.97-1.13
797,- 2447.
$ 7.5-10.8
1.9-2.5
$ 5.6-7.8
1.1-1.4
13.77.-19.67.
11.97.-16.97.
12.57.-16.17.
-0-
0-16
22-24
0-8.17.
12.47.-12.47.
0-124
308-336
0-5.47.
13.47.-14.67.
Minor
Minor
D
20-49
$ 600,000
3471
3479
171
18.07.
209
249
40
4.27.
237.
N/A
$ 63.7-71.9
15.2-17.2
$ 4.50
5.36
$10.87-11.69
2.75-2.95
1497.-3127.
$ 19.7-24.6
4.7-5.9
$ 10.1-13.8
1.7-2.4
15. 77.- 19. 67.
13.57.-16.87.
12.57.-16.17.
-0-
-0-
25
-0-
11 . 97.
-0-
750
-0-
14.17.
Minor
Minor
Codes
E
50-99
S 1,253,000
3471
3479
46
4.87.
57
67
11
1.27.
237.
N/A
$ 24.8-28.1
5.6-6.4
$ 3.40
4.03
$ 5.88-6.21
1.49-1.57
1117.-2337.
$ 8.5-11.3
1.9-2.5
S 4.8-7.2
.8-1.1
11.97.-15.67.
10.27.-13.47.
12.57.-16.17.
-0-
-0-
5
-0-
8.87.
-0-
335
-0-
11.07.
Minor
Minor
F
100-249
$ 2,940,000
3471
3479
23
2.47.
27
33
4
.47.
237.
N/A
$ 24.6-27.6
6.3-7.0
$ 4.92
6.01
$ 7.38-7.68
2.01-2.08
787.-1457.
$ 22.5-29.7
2.1-4.5
S 18.8-25.6
1.0-2.7
10.67.-14.07.
9.17.-12.17.
12.57.-16.17.
-0-
-0-
2
-0-
7.47.
-0-
280
-0-
8.77.
Minor
Minor
G
250 and Over
$ 6,566,000
3471
3479
4
.47
6
9
1
.17.
237,
N/A
$ 13.7-15.3
5.9-6.6
$ 1.70
2.52
$ 3.07-3.23
1.17-1.24
N/A
$ 18.7-20.9
2.0-2.7
$ 16.6-18.6
.8-1.9
11.91-15.67.
5.67.-13.57.
12.51-16.17.
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
Minor
Minor
$53,730-$6,566,000
3471
3479
950
1007
960
951
218
237,
237,
N/A
157.2-194,3
38.7-46.7
17.64
21.38
33.36-37.07
8.78-9.58
1187.-2567.
83.6-107.9
13.6-19.8
60.0-78.9
5.9-9.7
12.57.-16.17.
-0-
93-254
84-103
9. 97.- 26. 77.
11.97.-11.971
311-1,020
1,788-1,870
Minor
Minor
Minor
(Please see Page 4 for footnotes.)
-------
ENVIRONMENTAL PROTECTION AGENCY
ECONOMIC ANALYSIS OF EFFLUENT GUIDELINES
1977 AND 1983 - METAL FINISHING INDUSTRY SUMMARY
Notes (1) N/A is not available. However, it can be noted that Kearney did not identify any independent establishments with BPT treatment systems in the course of its study
(2) TI.J range of 1977 total Capital Cost is calculated by multiplying the number of establishments in each size group in the 1977 baseline forecast times th^ low
and high BPT Alternate A Capital Costs in Table V-15. The- costs of the 20-49 man shop reflect reflects cost including the evaporator.
(3) The range of 1983 Total Capital Cost is calculated by multiplying the number of establishments in each size group m the 1983 baseline forecast times the low and
high BAT Capital Costs in Table V-19. These are calculated for direct dischargers only. Municipal dischargers will not have additional capital cost = as the
1977 pretreatment standard for municipal dischargers will be unchanged in 1983.
(4) The average annual investment is the annual investment projected during 1977 and 1983 without pollution control equipment costs
(5) Based on an economic life of 10 years average annual treatment system investment will be equal to 107. of initial system cost. Average annual investment
with pollution control is equal to the average annual treatment system investment plus the average annual investment. In 1983 these are calculated for direct
inS19838erS °n Municipal dischargers will not have additional capital costs as the 1977 pretreatment standard for municipal dischargers will not be changed
(6) The percentages represent the range of cost associated with the process segment and size category for direct and municipal dischargers. The calculation is
based on the percent Capital Cost as shown on Tables V-15 and V-19 is of long-term debt plus equity as shown in Exhibits VI-30 through'VI-45.
(7) The range of 1977 Total Annual Costs is calculated by multiplying the number of establishments in each size group in the 1977 baseline forecast times the low and
high BPT Alternate A Annual Costs in Table V-14.
(8) The range of 1983 Total Annual Costs is calculated by multiplying the number of establishments in each size group in the 1983 baseline forecast times the low and
high BAT Annual Costs in Table V-18. These are calculated for direct dischargers only. Municipal dischargers will not have additional capital costs as the
1977 pretreatment standard for municipal dischargers will not be changed in 1983.
(9) Incremental increases excluding capital charges for 1977 are calculated by multiplying the 1977 capital costs by .15 and subtracting from the annual costs including
capital. The .15 factor reflects a capital charge of 15% consisting of 5% for cost of capital (107. cost of capital on the average mvestment--one-half of the total)
over a 10-year period and depreciation of 107= per year over a 10-year period
' al me " " ' • - - -
ental increases excluding capital charges for 1983 are calculated by multiplying the 1983 capital costs by .15 and subtracting from the annual costs including
l. The . 15 factor reflects a 157. capital charge consisting of 57. for cost of capital (107. cost of capital on one-half of the average investment) over a
r period and depreciation of 107. per year over a 10-year period. These are calculated for direct dischargers only. Municipal dischargers will not have
(10) Incremental
capital
10-year pti-o.^v, anu ^cpi.c^iaL.i.uu UL iw/. tit;j. yesi. uvei a lu-year perioa. inese are calculated tor direct dischargers only. Municipal discharge^ win uuu nave
(11) Asdderivld fro^Tabirvi-ll. ^ "" pretreatment standard for municipal dischargers will not be changed in 1983. Discrepencies in totals on Pages 1, 2 and 3 are due to rounding.
(12) These are calculated for direct dischargers only. Municipal dischargers will not have additional capital costs as the 1977 pretreatment standard for municipal
dischargers will not be changed in 1983. The incremental increases including capital charges as a percent of sales for direct dischargers are derived from Tabl
(13) For direct dischargers only.
I-14.
gers are derived from Table VI-17
(14) As derived from Table VI-14!
(15) The 1977 pretreatment standard for municipal dischargers will not be changed in 1983. Therefore the market price increases required by establishments in order to
recoup the annual costs for meeting the 1983 proposed effluent guidelines apply to direct dischargers only. Approximately 777. of the metal finishing plants are
municipal dischargers and 237. are direct dischargers (as discussed in Section II). By 1983 municipal dischargers will represent 807. or more of the Industry capacity
due to the following factors As plant size increases, the percentage contribution to total industry capacity increases. Many larger plants are or will become
mimifinnl HicnKai-nei-i-c Ko fr~n-a 1QB1 t- r~. •w.rn A KirvK f>r**r*t- i- ».,- „< . „.-—„ , ._ „ <-• j _,_ i.., -, -i J , J to ^ n^^ u±-<~ u± m t. L L L/C i_ unit.
ket
1977 standards as presented in Table VI-14.
(16) As derived from Exhibit VI-57.
(17) As derived from Exhibit VI-59.
(18> The percent^reduction of size segment capacity due to^closure is calculated against the estimated 1967 number of establishments.
(20) Employees affected as a percent of employment shown in Exhibit 1-9 utilizing a 23X/777. distribution for direct and municipal dischargers
(21) Measured against community and industry growth as a whole, the impacts are very minor.
(22) Negligible impact on the balance of trade as a whole is indicated.
Sources: (As indicated in footnotes)
-------
I - METAL FINISHING INDUSTRY CHARACTERISTICS
A - INTRODUCTION
STATEMENT OF
THE PROBLEM
The 1972 Amendments to the Federal Water Pollution Control
Act require the Environmental Protection Agency (EPA) to establish
effluent limitations for most major industries which are sources
of water pollution. These effluent limitations will apply to
existing and new plants. At legislated dates progressively more
restrictive limitations will be imposed. Specifically by July,
1977, application of the best practical control technology currently
available will be required. By July, 1983, a more restrictive set
of limitations will require the application of the best available
technology economically achievable, which, if possible, will
enable the industries to reach a zero level of discharge of
pollutants.
There has been a recognition of the potential economic
problems facing industry in meeting the effluent control require-
ments. As a result study programs to analyze the economic impact
of the costs of pollution control on American industry and on
the economy in general have been undertaken. These culminated
in the Economic Impact Studies sponsored by the Council for
Environmental Quality and the EPA in 1971 and 1972.
The EPA has now increased the number of industries which
are being studied, and expanded the scope of previous studies,
-------
1-2
by authorizing a series of Economic Impact Studies which are
specifically aimed at analyzing the economic impact of the costs
of water pollution abatement requirements under the Federal Water
Pollution Control Amendments of 1972„ This study analyzes the
potential economic impact from adopting effluent limitations in
the metal finishing industry.
SCOPE OF INDUSTRY
COVERAGE
The metal finishing industry was segmented by EPA into two
major groupings for purposes of effluent limitations and economic
analyses. The two groups consisted of:
1. The primary electroplating industry which includes
copper, nickel, chromium and zinc platers.
2. Other electroplaters and metal finishing plants.
The primary electroplating industry is covered under a separ-
ate study. Establishments covered in that analysis have not been
included in the present study so that duplication of impact is
eliminated. The scope of industry coverage in this study in-
cludes all electroplating establishments excluding copper, nickel,
chromium and zinc and all other metal finishing establishments„
STUDY COST
DATA
This study is based on assessing the economic impact utiliz-
ing cost data provided by EPA through its contract with Battelle
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1-3
Columbus Laboratories. Plants not yet meeting proposed EPA
requirements were surveyed. This provided a base for analysis
of data provided for impact analysis. Where significant differences
between the data existed, they are noted in the text, but the
costs used in the impact analyses are those provided by EPA based
on the Battelle Columbus Laboratory study.
METHOD OF
APPROACH
The study was conducted in two parts. The first part involved
defining the overall industry in terms of operating characteristics,
financial factors and geographic location. During this part it
was necessary to define major industry segments and indicate the
segments in which economic impact was likely to occur as a result
of the proposed effluent guidelines. An industry financial profile
was developed to assist in identifying whether plants could remain
viable and profitable, and to what degree financial characteristics
would be affected by the costs of the proposed effluent guidelines.
At the conclusion of the preparation of profiles, a methodology
for assessing economic impact was developed.
The steps taken to complete the first part included:
1. Published data and information from previous
studies, trade journals, government documents and Kearney files
were collected and analyzed.
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1-4
2. Representatives of the following agencies and
organizations were interviewed for purposes of developing
additional industry information:
(a) Environmental Protection Agency.
(b) National Association of
Metal Finishers.
(c) Chicago Electroplaters Institute.
(d) Metal Finishers Trade Institute.
(e) Battelle Columbus Laboratories.
(f) Institute of Printed Circuits.
(g) Metal Finishers Suppliers
Association.
3. Metal finishing shops were visited and new data
collected to supplement the available data base. Owners of
approximately 60 metal finishing shops were interviewed to develop
a broad understanding of operating characteristics of various metal
finishing processes. From this understanding it was possible to
assess how water pollution control could affect the industry
establishments.
4. A financial data base was established. Dun and
Bradstreet reports were used to develop operating and financial
profiles. This was supplemented with other data including NAMF
survey studies, plant interviews and annual profit reports.
5. Representatives of EPA and Kearney met to discuss
the report of the first part and costs used in the impact
analysis.
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1-5
The second part of the study was designed to utilize data
collected in the first part and develop the methodology for impact
analysis to determine potential effects on the industry adopting
the proposed effluent guidelines. Considering alternative
scenarios including various levels of price changes, an estimate
was made of the number of closures expected to result. From this
analysis, production curtailment, employment effects and secondary
effects were determined.
The steps taken to complete the second part were as follows:
1. Dun and Bradstreet reports and other industry
financial information were analyzed for determining financial
ability to sustain higher costs and expansion of financing.
2. Cost data for pollution abatement were collected
from EPA and the information evaluated to determine o.ts appli-
cability to the segments previously established in the first
part of the study.
3. The proposed effluent limitation guidelines were
applied to assess differences in the magnitude of impact on
industry segments.
4. Financial institutions, insurance companies, c d
brokerage institutions were contacted. The results, where
comparable situations arose from other interviews, were app~ Led
to this study.
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1-6
5. Based on the data collected impact assessments
were developed by size of establishments for the impacted
segments.
6. A report was prepared to cover the findings in
both parts of the study.
Sources of data used in this study are presented in Exhibit
1-1. A list of contacts for information utilized in this study
is shown in Exhibit 1-2.
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1-7
B - SEGMENTATION OF THE INDUSTRY
INTRODUCTION
In this section characteristics of the metal finishing
industry are discussed in order to determine the major markets
segments expected to be significantly impacted by pollution
control standards.
Metal finishing is a process which changes the surface
characteristics of a metal or formed product. In recent years,
however, some plating processes, typically done on metal surfaces
are also performed on plastics and other nonmetallic surfaces.
Thus, the establishments which are classified as metal finishers
may also perform this nonmetal service.
In segmenting this industry for the purposes of this study,
several important distinctions in the classification of metal
finishing processes must be defined and clearly maintained in
order to properly understand the economic impact analyses
developed. These are:
1. EPA industry categorization.
2. "Establishments" versus "installations."
3. "Independent" versus "captive" operations.
4. Process segments.
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EFA INDUSTRY
CATEGORIZATION
The metal finishing industry was segmented by EPA into two
major groupings for purposes of effluent limitations and economic
analyses. The two groups consisted of:
1. The primary electroplating industry which includes
copper, nickel, chromium, and zinc platers.
2. Other electroplaters and metal finishing plants.
The second of these groupings includes the establishments
which are the subject of this impact assessment. These groupings
are included in two 4-digit standard industrial classification
(SIC Code) industries defined by the Bureau of the Census.
1. SIC 3471 - Electroplating, anodizing, coloring,
and polishing.
2. SIC 3479 - Other coating, engraving and allied
services not elsewhere classified.
The economic analysis of effluent guidelines in the elec-
troplating industry included zinc plating and electroplating
(unspecified), chromium plating, nickel plating, and copper plat-
ing. Plants covered in this analysis have not been included in
the economic analysis of effluent guidelines in the metal fin-
ishing industry so that duplication of impact is eliminated.
Establishments in the metal finishing industry fall entirely
within these two 4-digit SIC Codes. Detailed industry statistics
covering the number of establishments, employment, value added,
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1-9
shipments, capital expenditures, and process consumption for SIC
Code 3471 are presented in Exhibit 1-3 for 1958, 1963, 1967 and
1972. Industry statistics for SIC Code 3479 are presented in
Exhibit 1-4. Exhibit 1-5 combines these statistics for the
total industry. The data in these exhibits covers both of the
EPA categories established for impact study.
The number of establishments in the metal finishing industry
is presented in Table 1-1.
Table 1-1
Total Metal Finishing Establishments
Industry Segment 1967 1972
SIC Code 3471 3,241 3,220
SIC Code 3479 1,443 1,457
Total 4.684 4,677
Source: Exhibits II-3, II-4 and II-5.
Census data for 1972 is incomplete and preliminary at this
time. Therefore detailed analysis utilizes the 1967 data base.
Of the 4,684 plants in the metal finishing industry in 1967,
2,423 are excluded from this study since these are covered in
the primary electroplating industry category. They are the sub-
ject of a separate economic impact report.
^ This number represents all plants excluded from the study,
the number of plants with over 100 employees is 153.
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"ESTABLISHMENTS" VERSUS
"INSTALLATIONS"
1. Metal Finishing "Establishments." These are se-
parately operated establishments*- ' whose primary activity is
the production of metal finishing services. These may be inde-
pendent (job) shops which sell their services in the marketplace
to numerous metalworking industries or they may be owned by a
company (captive) and operated for their own use without selling
to outside customers.
2. Metal Finishing "Installations." These are in-
stallations in an establishment primarily engaged in another
industry. By their nature they are "captive" and are typically
integrated into the production processes of the products which
the plant is producing. These installations represent a small
Establishment as defined by the Standard Industrial Classifi-
cation Manual is:
"An economic unit, generally at a single physical location
where business is conducted or where services or industrial
operations are performed. (For example: a factory, mill,
or store).
"Where distinct and separate economic activities are performed
at a single physical location (such as construction activities
operated out of the same physical location as a lumber yard), each
activity should be treated as a separate establishment wherever
(1) no one industry description in the classification includes
such combined activities; (2) the employment in each such econo-
mic activity is significant; and (3) reports can be prepared on
the number of employees, their wages and salaries, sales or
receipts, and other establishment type data...
"An establishment is not necessarily identical with the enter-
prise or company which may consist of one or more establishments.
Also, it is to be distinguished from subunits, departments or
divisions. Supplemental interpretations of the definition of an
establishment are included in the industry descriptions of the
Standard Industrial Classification where appropriate."
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portion of the employment and value added in relation to the
total operations of these plants.
This study covers only metal finishing establishments ex-
cluding those in the primary electroplating industry. These are
in the first category above and include both independent and
captive establishments. This includes firms which typically
offer metal finishing services for sale in the marketplace.
This study does not cover metal finishing "installations"
as described in the second category. Services provided by these
captive installations represent a significant portion of the
total metal finishing operations conducted by industry. Kearney
survey interviews indicate that these installations produce on
the order of 90% of the total volume of metal finishing. While
these operations are not included in the impact assessment,
a brief summary of the characteristics of captive installations
owned and operated by the specific industry requiring this
service appears in Appendix A - In-Plant Metal Finishing Process
Installations.
'INDEPENDENT" VERSUS
"CAPTIVE" OPERATIONS
"Independent" operations are those which offer commercial
services in the marketplace. "Captive" operations are those
which are owned and operated by a business for their own inter-
nal use and any sale of commercial services is incidental. Both
independent and captive establishments are included in the study.
These should not be confused with captive in-plant process
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installations which are not in this impact assessment.
Financial data in the form of income statements and balance
sheet information are only available for independent establish-
ments. Data on captive establishments is usually considered con-
fidential and often not broken out by owning companies on a com-
parable basis to independent establishments. Thus, financial
data in this report is based only on information available from
independent establishments.
PROCESS
SEGMENTS
The major metal finishing processes must be identified in
order to gain an understanding of the metal finishing industry.
These processes may be the major activity of a plant or be in
combination with other plant operations, but each represent an
important segment of the services provided by the metal finish-
ing industry. The major processes in the metal finishing indus-
try are identified in Table 1-2 on the following page.
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1-13
Table 1-2
Metal Finishing Industry Major Process
Segments and Number of Establishments
Estimated
Number of
Process Segment Establishments* SIC Code
Zinc Plating and Elec-
troplating (unspeci-
fied) 1,078 3471
Chromium Plating 796 3471
Nickel Plating 231 3471
Copper Plating 318 "3471
Polishing and Buffing 174 3471
Shot Blasting 21 3471
Painting 532 3479
Galvanizing and Tinning 416 34/9
Enameling 168 3479
Cadmium Plating 109 3471
Precious Metal Plating 152 3471
Anodizing i62 3471
Pickling 80 3479
Phosphatizing 35 3479
Etching 212 3479
Total 4J584
Note: * These establishments have the indicated process as
their primary metal finishing service. Most provide
additional service also.
Source: Exhibit 1-6
Several other specialized finishing services exist, but
the processes shown above are those most representative of tK
metal finishing industry. A detailed breakdown of the number
of plants by size of establishment in each major metal finishing
industry segment is presented in Exhibit 1-6.
Reviewing the above listing by process segment, a number of
processes can be eliminated from detailed study:
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I -
1. The first four processes listed (zinc, chromium,
nickel, and copper plating) are covered by the other EPA category
for this industry in a separate report previously discussed.
General plating (tin, lead, and iron) as defined by Battelle
Columbus Laboratories in their report "Development Document for
Effluent Limitations, Guidelines, and Standards of Performance
for the Metal Finishing Industry was included in the zinc plating
and electroplating (unspecified) section of the electroplating
industry study in Phase I.
General plating is usually done in chromium, zinc,
nickel and/or copper plating plants. However, some general plating
is done in cadmium and/or precious metal plating plarts. In all
cases, the other plating processes are the primary processes
and general plating is not identified as the primary activity of
the plant. All plants covered will have a base cost associated
with effluent guidelines pertaining to the primary plating process
and an additional incremental cost pertaining to the general
plating process. Therefore, because general plating does not
exist as a primary activity it is considered as a part of the
pollution control costs for the major plating process. No further
specific Consideration will be given to this segment as establish-
ments engaged in this service are considered in other segments.
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1-15
2. Polishing and buffing and shotblasting are non-
aqueous processes and therefore have no treatment costs. Thus,
these establishments are eliminated from further consideration.
3. Battelle Columbus Laboratories in their report,
"Development Document for Effluent Limitations, Guidelines, and
Standards of Performance for the Metal Finishing Industry," did
not cover painting, galvanizing and tinning and enameling,,
Therefore, these categories are not considered in this study.
4. Battelle Columbus Laboratories in their report
"Development Document for Effluent Limitations, Guidelines, and
Standards of Performance for the Metal Finishing Industry" did
cover the electropainting, electropolishing, and electrochemical
milling processes. Kearney has not included these processes in
the economic impact analysis of proposed effluent guidelines in
the metal finishing industry for the reasons stated below:
(a) Electropainting. Electropainting is
generally used in the automotive indus-
try. It is primarily used in captive
in-plant process installations. Electro-
painting has not been found to be perform-
ed by any of the establishments which
Kearney surveyed during this study which
fall within SIC Codes 3471 and 3479.
(b) Electropolishing. Electropolishing
is generally used in conjunction with
manufacturing processes as found in
industries such as automotive and food
handling equipment. This process is
usually performed in anodizing plants.
It is performed as a primary activity
in only one of the establishments
which fall within the SIC Codes 3471
and 3479.
(c) Electrochemical Milling. Electro-
chemical milling is a specialized
process used primarily in the auto-
motive and aircraft industries, It
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1-16
generally occurs in captive in-plant
process installations. No electro-
chemical milling establishments were
discovered in SIC Codes 3471 and 3479
during the course of Kearney's survey.
(d) Electroless Plating. Electroless plating
is used in the appliance and automotive
industry. Electroless plating has not
been found to be performed by any of
the establishments which Kearney surveyed
during this study which fall within SIC
3471 and 3474.
Eliminating the above process segments, the metal finishing
process coverage in this study will include all establishments
primarily engaged in the remaining process segments which are
summarized in the table below.
Table 1-3
Process Segment Study Coverage
Process Segment Number of Establishments
Cadmium Plating 109
Precious Metal Plating 152
Anodizing 362
Pickling °U
Phosphatizing 35
Etching %12
Total m
Source: Exhibit 1-6
Note that the study coverage includes six primary process
industry segments including 950 of the 4,684 establishments
(20% of the total) in SIC 3471 and SIC 3479.
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1-17
SUMMARY
This section has reviewed the industry segments of SIC 3471
and SIC 3479 to indicate the relationship of the segments to be
given detailed study. All future reference to metal finishing
plants and processes covered within the scope of this study
will be made using the terminology "metal finishing industry."
This will designate the six primary process segments and 950
establishments shown in Table 1-3.
The proposed effluent limitation guidelines and standards
of performance for the metal finishing industry are applicable
only to plants which discharge effluents directly into navigable
water. Plants which discharge into public or private wastewater
treatment systems are not covered under the proposed guidelines.
These will be covered under a guideline scheduled to be promul-
gated in the near future.
Generally, all data relating to metal finishing industry
characteristics should pertain only to those processes cited
above. This is done throughout the report when data are avail-
able in this form or when an accurate breakdown can be made.
Some data necessary for the analysis of economic impact is
available only for the entire 4-digit SIC Code categories and
cannot accurately be further broken down. Therefore, all subse-
quent tables and exhibits in this report will indicate whether
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1-18
the information pertains to the metal finishing industry only
as characterized on the preceding page, or to one or both of
the 4-digit SIC code categories„
Detailed statistics relating to the metal finishing
industry processes covered in this study will be presented in
subsequent paragraphs and sections of this report„ When data
is obtained from the Census of Manufactures, 1967 data is used
because 1972 Census of Manufactures' data is incomplete and
preliminary„ There was relatively little change in the number
of establishments for 1967 to 1972. All tables and exhibits in
subsequent sections of this report indicate specific data sources
and dates.
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C - METAL FINISHING INDUSTRY
AND MARKET CHARACTERISTICS
INTRODUCTION
This section describes the key economic characteristics
of the metal finishing industry and market, which are necessary
to establish a framework for the assessment of economic impact.
The discussion is under the following subject headings:
Market Demand
Substitution Potential
End Use Markets
Industry Size Characteristics
Industry Location
Industry Survey
Point of Effluent Discharge
Impact Segmentation
Summary
MARKET
DEMAND
(a) Demand Factors
Demand for metal finishing services is generated by a
requirement for products with the physical properties which
metal finishing provides.
The principal physical properties which can be provided
by the range of available metal finishing processes are:
1. Conductivity. Conductivity is enhanced when a
conductive metallic surface is plated onto a noniretallic
surface or low conductive base metal.
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2. Corrosion Resistance. Metal finishing provides
base metal products, which are susceptible to high levels of
corrosion, with increased protection through a treatment which
makes them less corrosive or noncorrosive.
3. Durability. Metal finishing increases durability
or resistance to wear by providing a harder surface finish to
a softer base metal.
40 Decorationo Decoration provides aesthetic value
by changing the surface characteristics of base metals„
The above descriptions are not intended to be inclusive
of all physical properties provided by metal finishing, but
are presented to provide a general understanding of the
importance of metal finishing processes to many products.
It is exceptionally difficult to provide accurate estimates
of the total demand for metal finishing processes since by its
nature, metal finishing includes both establishments and in-plant
process installations. However, it is possible to provide a
general estimate of the extent of usage in the primary using
industry segments. By understanding the broad industry usage
of metal finishing it is then possible to understand some
of the factors which affect the demand for metal finishing
services.
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Each major metal finishing process is generally used to
finish specific products in various industries„ Economically
feasible substitutes do not exist in primary applications under
current economic and market conditions. Therefore, the demand
for metal finishing services is derived from the demand for
metal finished products.
Exhibit 1-7 lists nine 2-digit SIC code groups where some
forms of metal finishing operations take place. These industry
groupings include over 100,000 plants according to the 1967
Census of Manufactures. This number of plants represents
approximately 28% of all manufacturing establishments in the
United States. However, these plants use metal finishing
services from their own metal finishing operations as well as
purchased services from independent establishments.
(b) Product
Applications
A brief discussion'of the principal applications for each
important metal finishing process follows:
1. Cadmium Plating. Principal reasons for cadmium
plat ing include:
(a) Protection Against Corrosion - Cadmium is
used extensively for this purpose on iron
and steel because of its anodic relation-
ship to iron. Although the cadmium may
become nicked or scratched exposing the
base metal, the ferrous metal remains
protected,,
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I -
(b) Minimization of Galvanic Corrosion - Gal-
vanic corrosion occurs" when two dissimilar
metals are assembled together. Cadmium
plating reduces this corrosion.
(c) Splderability - Cadmium plating increases
the ability to solder materials.
Cadmium plating cannot be used where exposure to
chemicals is high because the resistance to corrosion under
these conditions is low. Food equipment cannot be plated with
cadmium because of toxicity.
2. Precious Metal Plating. There are three impor-
tant reasons for precious metal plating which are:
(a) Decoration - Precious metals such as
gold and silver are plated on less
expensive surfaces for esthetic value.
(b) Protection Against Corrosion - Precious
metal plating provides excellent pro-
tection against corrosion.
(c) Conductivity - Precious metal plating
providessuperior electrical conduc-
tivity.
3. Anodizing. Anodizing is performed on aluminum
base products. Aluminum products are anodized for the following
reasons.
(a) Corrosion Resistance - Corrosion
resistance is provided by the
aluminum oxide coating. It is
impervious to oxidation caused by
the atmosphere and salt water.
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1-23
(b) Paint Adhesion - Paint adhesion is
enhanced because the anodic coating
offers a chemically active surface
for most paint systems. When the
anodic film is produced in a sulfuric
acid bath, it is colorless, permitting
a clear surface finish„
(c) Improved Plating - Plating is improved
because of the inherent porosity of
the anodic film.
(d) Decoration - All anodic coatings are
lustrous and have relatively good
abrasion resistance. Therefore, these
coatings are used as a final finish if
the natural aluminum appearance is
desirable.
(e) Insulation - Aluminum based products
can be electrically insulated because
the oxide coating is dielectric.
(f) Abrasion Resistance - Anodizing pro-
vides excellent abrasion resistance
on aluminum parts.
4. Pickling. The primary service (application)
provided by independent pickling establishments is the re-
moval of surface oxides (scale) from forged products. The
most important reasons for pickling include:
(a) Oxide Scale Removal - Removal of oxide
scales due to high temperature opera-
tion, heat treatment or high temperature
manufacturing operations.
(b) Rust Removal - Removal of rust from
steel prior to other operations.
(c) Deoxidation - Deoxidation of metals
for welding, soldering, brazing, etc.
(d) Corrosion Removal - Removal of corro-
sion products with attendant passivation
of the surface, e.g. aluminum, magnesium,
stainless steel.
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1-24
(e) Pissolution of Materials - Dissolving
solid soils, e.g., metal fuzz and chips,
finely divided solids used in polishing.
(f) Removal of Hard Water Deposits - Removal
of deposits derived from hard water
containing salts, etc0
(g) Acid Removal - Removal of sundry acid
soluble soils.
(h) Brightening - Brightening of metallic
surfaces.
5. Phosphatizing. Principal applications for phos-
phatizing include:
(a) Improved Surface Characteristics -
Phosphatizing is commonly used to
provide a base for paint, oil or other
rust preventive materials; a surface
that facilitates cold forming, or a
base for cold forming; or a base for
adhesives in plastic-metal laminations,,
(b) Durability - Phosphatizing provides
lubricity and resistance to wear.
(c) Corrosion Resistance - Phosphatizing
provides temporary or short-term
resistance to mild corrosion,
6. Etching. Etching is used primarily to remove
metal or metal plating at a predetermined and uniform rate to
produce a smooth surface, without adversely affecting dimen-
sional tolerances and the mechanical properties of the part.
Etching also provides chemical stability and increases the
concentration and temperature range in which the product may
be used.
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1-25
SUBSTITUTION
POTENTIAL
It is important to have an understanding of potential
substitutes for metal finishing. These include both substitute
processes, products, and import competition. As prices rise
these potential substitutes may take a greater share of the
potential market or reduce the market for metal finishing services
Potential substitute products/processes for each metal
finishing process are discussed below0
1. Cadmium Plating. Zinc plating is the only
practical substitute for cadmium plating. Cadmium plating
reduces the amount of corrosion more than zinc plating.
This is an important consideration in applications
where a build-up of corrosion products would have a deterimental
effect, such as preventing the flow of current in electrical
components or the movement of closely fitting parts such as
hinges. For such applications cadmium is preferable to zinc.
Cadmium plating retains its initial appearance longer, is better
at preventing galvanic corrosion, and is superior to zinc for
the plating of cast iron. Cadmium plating must be used where
solderability is necessary, as zinc cannot be soldered. Cadmium
plating is preferable to zinc in contaminated marine atmospheres.
In rural areas, cadmium and zinc offer equal protection. However,
zinc is superior to cadmium in industrial environments. In terms
of the cost of metal anodes, cadmium is nearly 13 times as
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1-26
expensive as zinc. This cost ususally has little bearing on
usage as the cost of the plating material is a very small
portion of the total plating cost.
2. Precious Metal Plating. Solid precious metal
pieces can be substituted for precious metal plating in appli-
cations where precious metal plating is used for aesthetic
purposes. However, the substitution of solid precious metals
will result in a considerable increase in cost. Substitute
metals and metal plate of other materials can also be used for
precious metal plating„ However, these substitutes are usually
not judged to have as high as aesthetic value.
Other metallic plating such as copper can be sub-
stituted for precious metals in applications designed for elec-
trical conductivity„ However, these other conductive metals
tend to corrode faster reducing the life of the conductive
element. A reduced life is unacceptable in most applications.
On this basis it can be concluded that there are few
practical substitutes for precious metal plating.
3. Anodizing. Painting or plating on aluminum can
be used as a substitute for anodizing for corrosion prevention.
However, paint adherence is poor on aluminum which is not anodized
and corrosion will result anywhere the paint chips off. In terms
of costs, plating is approximately seven times as expensive as
anodizingc Therefore, no practical substitutes exist for
anodizingo
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1-27
4. Pickling. No practical substitutes exist for
pickling in the removal of oxide scales and other corrosive
elements. Mechanical oxide scale and/or corrosive element
removal is possible but significantly more expensive.
5. Phosphatizing (Parkerizing and Bonderizing).
There are no practical substitutes for phosphatizing.
6- Etching. No practical substitutes exist for
etching. Mechanical etching processes can be substituted for
chemical processes in nameplate applications. However, in terms
of costs, mechanical etching is approximately two to six times
as expensive as chemical etching.
For a broad range of metal products the closest substitute
products are also typically metal products requiring metal
finishing. In addition, metal finishing costs are usually
a small percentage (less than 5%) of the final cost of these
products. Thus there does not appear to be any significant
potential for major changes to substitute final products. How-
ever, there is some limited potential for substitution in
specific instances. Examples are discussed below:
1. In precious metal plating for jewelry there is
potential for substitution of a solid or filled metal product
for the plated product. However, plating costs would have
to approach the costs of a solid or filled metal product for
this to occur to any significant extent.
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1-28
2. Some plastic products could be substituted for
metal products in some applications. This potential is not
general, but is limited to specific products. For example,
cheap plastic jewelry or other material may compete with cheap
plated jewelry, and substitution in the marketplace would occur.
Plastic fasteners in applications not requiring great tension
may be substituted for plated fasteners in some applications.
3. Stainless steel products may be substituted for
cadmium plated steel products. However, the cost trade off on
most applications is not close at the present time.
In summary, the potential for final product substitution
due to the increased costs of metal finishing is very limited.
Import substitution of final product appears to have
definite potential when:
lo Metal finishing costs are a high percentage of
the final cost of the product. In this instance, a significant
increase in metal finishing costs results in a significant
advantage to foreign platers not subject to similar costs.
2. The volume of product being plated and nature of
the plating services must permit substitution by foreign products
Low volumes of plating integral to manufacturing processes are
not readily susceptible to such foreign substitutions„
3. Tariff or other economic barriers to trade must
permit effective import competition„
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1-29
The most important category of product which may be poten-
tially impacted by imports is fasteners. Metal finishing is up
to 40% of fastener production costs. Volume is high and there is
current import competition. Kearney identified no other broad
category of product which might have similar potential impact.
END USE
MARKETS
Metal finishing services are used by almost every industry.
The most important industries in terms of the dollar value of
metal finishing services purchased are presented by process in
Table 1-4.
Table 1-4
Major Industries Using Metal Finishing
Services by Process Type
Metal Finishing Process End Use Industry
Cadmium Plating Automotive, Electronics, Fasteners,
Appliances, Radio and Television
Precious Metal Plating Electronics, Jewelry
Anodizing Automotive, Aircraft, Architectural
Pickling Steel forging (Tubing, Wire and
Bars)
Phosphatizing Automotive, Fasteners, Hardware,
Small Arms Components
Etching Electronics, Nameplates
Sources: Metals Handbook, Eighth Edition, American Society for
Metals; Electroplating Engineering Handbook, Reinhold
Publishing Corporation, New York, New York and Kearney
Survey Interviews.
-------
1-30
From the table note that:
1. Thirteen industries are important end users of
the metal finishing processes under study.
2. The automotive industry makes extensive use of
cadmium plating, anodizing and phosphatizing.
3. The electronics industry makes extensive use of
cadmium plating, precious metal plating and etching.
4. The fastener industry makes extensive use of
cadmium plating and phosphatizing.
INDUSTRY SIZE
CHARACTERISTICS
Metal finishing industry size can best be measured by
reviewing number of firms in the industry, value of shipments,
value added by manufacturer and employment.
(a) Number of
Establishments
The number of plants by process type in the metal finishing
industry is presented in Table 1-5.
Table 1-5
Number of Metal Finishing Establishments
by Process Type - 1967
Metal Finishing
Process Type
Cadmium Plating
Precious Metal Plating
Anodizing
Pickling
Phosphatizing
Etching
Total
Total
Establishments
109
152
362
80
35
212
950
Percent
of Total
11.5%
16.0
38.1
8.4
3.7
22.3
100 . 0%
Source: Exhibit 1-6.
-------
1-31
From the table note that:
1. Anodizing accounts for the largest portion of
metal finishing industry plants with 38.1 percent.
2. Etching is the second largest segment, with 22.3
percent of the industry plants.
3. Precious metal plating and cadmium plating are
important segments with 16.0 percent and 11.5 percent of the
industry plants respectively.
4. Pickling and phosphatizing are minor segments,
with 8.4 percent and 3.7 percent of the industry plants respectively,
(b) Establishment
Size
The number of metal finishing establishments by process
type and plant size by number of employees is presented in
Table 1-6 shown below:
Table 1-6
Metal Finishing Establishments by Process
Type and Plant Size by Number
of Employees - 1967
Process Type
Establishment Precious
Size by Number Cadmium Metal
of Employees Plating Plating Anodizing Pickling Phosphatizing Etching Total
1- 4 41 58 137 33 15 92 376
5. 9 19 27 64 14 6 37 167
10- 19 19 27 65 12 5 35 163
20- 49 21 29 70 13 5 33 171
50- 99 7 8 18 4 2 7 46
100-249m 22 63 2 8 23
250- 500*• ' - 1 2 _1 _i i 4
Total 109 152 362. 80 35. 212 950
Note: (1) There are no metal finishing plants which employ over 500 personnel.
Source: Exhibit 1-6
-------
1-32
From the table note that:
1. Small firms are the most numerous metal finishing
establishments in the industry. Approximately 39.5 percent of
the establishments employ 1-4 workers.
2 The two intermediate size classifications together
represent about the same number of establishments as the smallest
firms. Approximately 17.6 percent of the establishments employ
5-9 employees and approximately 17.2 percent employ 10 - 19
employees.
3. Approximately 25.7 percent of the establishments
employ 20 and over employees. However, these firms have over
73 percent of total employment and capacity.
(c) Value of
Shipments
Value of the metal finishing industry shipments by process
type for 1967 is presented in Table 1-7 on the following page.
-------
1-33
Table 1-7
Metal Finishing Industry Value
of Shipments by Process Type - 1967
Value of
Shipments
(Thousands)
$ 30,300
Percent
of Total
10.0%
Average Value
of Shipments
per Establishment
(Thousands)
278
43,900
105,100
38,300
14,900
71,000
$303,500
14.5
34.6
12.6
5.0
23.3
100.0%
289
290
479
426
335
Metal Finishing
Process Type
Cadmium Plating
Precious Metal
Plating
Anodizing
Pickling
Phosphatizing
Etching
Total
Source: Exhibits 1-8 and 1-10
From the data in the table note that:
1. Pickling, phosphatizing and etching tend to have
a higher average value of shipments per establishment than
cadmium plating, precious metal plating and anodizing.
2. Anodizing has the highest value of shipments
representing a $105.1 million and 34.6% of the total value of
shipments of all metal finishing establishments.
3. Etching has the second highest value of shipments
representing $71.0 million and 23.3% of the total value of
shipments.
-------
1-34
4. Precious metal plating, cadmium plating and
pickling have substantial value of shipments with $43.9 million,
$30.3 million and $38.3 million respectively.
(d) Market Share by
Size of Establishment
The small establishments dominate the market in number of
establishments but not in market share. Table 1-8 shows a
comparison of establishments in the metal finishing industry
by size and market share.
Table 1-8
Metal Finishing Establishment
Market Share by Plant Size - 1967
Establishment Size
by Number
of Employees
1 -
5 -
10 -
20 -
50 -
100 -
250 -
Total
4
9
19
49
99
249
500
Value of
Shipments
(Thousands)
$ 15,500
17,000
33,000
84,100
56,100
71,500
26,300
$303
,500
Percent
of Total
5.
5.
10.
27.
18.
23.
8.
100.
1%
6
9
7
5
5
7
0%
Cumulative
Percent
of Total
10.
21.
49.
67.
91.
100.
7%
6
3
8
3
0
Source: Exhibit 1-9 and 1-10
Note that establishments with over 20 employees have a total
market share of over 75%.
-------
I - 35
(e) Value Added by
Manufacture
Value added by manufacture in the metal finishing industry
by process type for 1967 is presented below in Table 1-9.
Table 1-9
Metal Finishing Industry Value Added
by Manufacture
by Establishment by Process Type - 1967
Average
Metal Finishing Value Added Percent Value Added
Process Type By Establishments of Total per Plant
(Thousands)
Cadmium Plating $ 19,300 11.0% $ 177
Precious Metal
Plating
Anodizing
Pickling
Phosphatizing
Etching
Total
Source: Exhibit 1-8
From the table note that:
1. Pickling, phosphatizing and etching tend to have
a higher value added per plant than cadmium plating, precious
metal plating and anodizing.
2. Anodizing contributes the largest dollar amount
to value added, representing $64.2 million and 36.5% of the
total value added by the metal finishing industry processes
26,600
64,200
16,100
7,000
42,500
$175,700
15.1
36.5
9.2
4.0
24.2
100.0%
175
177
201
200
201
-------
1-36
3. Etching contributes a substantial dollar amount
to value added, representing $42.5 million and 24.2% of the
total value added by metal finishing industry processes.
4. Phosphating contributes only a small dollar amount
to value added, representing $7.0 million and 4.0% of the total
value added by metal finishing industry processes.
(f) Value Added by
Size of Establishment
The small establishments tend to contribute only a small
portion of the total value added by the metal finishing industry.
Value added as a percentage of the value of shipments tends to
decrease as firm size increases. Table 1-10 presents a compari-
son of establishments in the metal finishing industry by size
and value added.
Table I-10
Metal Finishing Value Added
by Plant Size - 1967
Establishment
Size by Number
of Employees
Total
Value Added
Percent of
Total
Value Added as
a Percent of the
Value of Shipments
1 -
5 -
10 -
20 -
50 -
100 -
250 -
4
9
19
49
99
249
500
Total
(Thousands)
$ 9,000
11,000
21,300
51,400
31,000
34,000
18,000
$175,700
5.1%
6.3
12.1
29.3
17.6
19.4
10.2
100 . 0%
81.8%
73.3
73.5
70.5
64.6
60.7
66.9
Source: Exhibit 1-9
-------
1-37
Note that small establishments have a higher percent of
value added to shipments indicating that more labor intensive
processes are used by smaller firms.
(g) Employment
Estimated employment in the metal finishing industry by
process type is presented in Table 1-11.
Table 1-11
Metal Finishing Industry Employment
by Process Type - 1967
Employment
1,863
Percent
of Total
10.9%
Average
Employment
Per Plant
17
Metal Finishing
Process Type
Cadmium Plating
Precious Metal
Plating
Anodizing
Pickling
Phosphatizing
Etching
Total
Source: Exhibit 1-11
From the table note that:
1. Average employment in the metal finishing industry
is 18 personnel. Total industry employment is about 17,000.
2. Anodizing has the most employees with 6,491 or
38.1% of the total.
2,724
6,491
1,760
705
3,511
17 ,054
16.0
38.1
10.3
4.1
20.6
100 . 0%
18
18
22
20
17
18
-------
1-38
3. Etching and precious metal plating are significant
employers, accounting for 3,511 and 2,724 employees respectively
(20.6% and 16.0%).
4. Phosphatizing employs only 705, or 4.1%. of the total,
(h) Employment by
Establishment Size
Metal finishing employment varies by establishment size.
Table 1-12 below presents an estimate of metal finishing
employment by establishment size.
Table 1-12
Metal Finishing Employment
by Establishment Size
Establishment Size
by
Number of Employees
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 - 500
Total
Number
of
Employees
659
1,119
2,300
5,301
3,055
3,220
1,400
17,054
Percent
of Total
3.9%
6.5
13.5
31.1
17.9
18.9
8.2
100 . 0%
Cumulative
Percent
of Total
10.4%
23.9
55.0
72.9
91.8
100.0
Source: Exhibit 1-11
Note that plants with more than 20 employees represent over
75% of total employment.
INDUSTRY LOCATION
Metal finishing plants are located in nearly all 50 states;
however, the major concentration is in the principal industrial
areas in the Midwest, Northeast and the Western Seaboard.
-------
1-39
Table 1-13 cites the location of metal finishing plants
in the United States by region. Exhibit 1-12 illustrates the
location of metal finishing plants in the United States by state.
Table 1-13
Geographical Location of Metal
Finishing Establishments - 1967
Number of Percent of Percent of Value
Census Region Plants Total Added Per Region
New England 106 11.2% 7.2%
Middle Atlantic 211 22.2 21.9
East North Central 299 31.5 28.7
West North Central 38 4.0 6.4
South Atlantic 46 4.8 11.2
East South Central 21 2.2 5.2
West South Central 45 4.7 6.3
Mountain 15 1.6 1.7
Pacific 169 17.8 11.4
Total . 950 100.0% 100.0%
Source: Exhibit 1-12 and
U.S. Census of Manufacture, 1967
The New England, Middle Atlantic and East North Central
states have about three-fourths of the metal finishing industry
establishments. The remaining establishments are spread through-
out the regions. It should be also noted that metal finishing
establishments are located in areas where high levels of manu-
facturing activity occur. The percentage distribution of plants
is similar to that of value added throughout the country.
-------
1-40
Geographical segmentation is important to consider, especially
in areas where relatively few establishments exist. Thus, in these
areas the markets are smaller and competitive pressures are some-
what less because transportation costs reduce the number of firms
that competitively price their services in the areas. The impact
of pollution control requirments on small metal finishing estab-
lishments can be absorbed in areas where there are only a few
plants because prices can be raised to cover costs without loss
of business due to competitve pressures. Industries in those
areas depend upon the existence of these plants for metal
finishing services.
INDUSTRY
SURVEY
The limitation of data available from census studies required
that additional information regarding pricing and customer demand
be compiled for use in the impact analysis phase of the study.
This data was obtained in an independent survey of the industry
performed by Kearney. Both metal finishing establishments and
customers were contacted during this survey. Exhibit 1-13 pre-
sents the discussion guide used in contacts with metal finishing
establishments. Exhibit 1-14 presents the discussion guide used
in contacts with metal finishing customers.
The data obtained in the survey provided a basis for many
assumptions used in the analysis of the metal finishing industry
-------
1-41
and the effects which effluent guidelines will have on this
industry. Particular emphasis was placed on characteristics
such as size, employment, sales volume, diversification, plant
locations, and production constraints.
(a) Sales
Annual sales of the establishments surveyed ranged from
$25,000 to $8 million; however, most of the plants reported
sales of less than $1 million. Although no definite conclusions
can be drawn from the small sample, the establishments surveyed
are typically small business operating with relatively small
annual sales volumes.
(b) Emp1oymen t
Although no definite conclusions can be drawn from the small
sample, the survey generally verified the employment figures and
size distribution of firms by number of employees presented in
the metal finishing industry size characteristics previously
reviewed.
(c) Value Added by
Manufacture
Those in the sample who were familiar with the value added
concept, generally confirmed the value added figures in the metal
finishing industry size characteristics reported in this study.
-------
1-42
POINT OF EFFLUENT
DISCHARGE
Metal finishing industry establishments are primarily located
in urban areas and discharge effluents to municipal sewer systems.
There are very few urban establishments which discharge directly
to navigable waters. However, a number of plants are located in
rural areas and discharge directly to navigable waters or storm
sewers. This study classifies establishments into two major
categories:
1. Direct Dischargers. - These are establishments
which are discharging their effluent into streams, lakes, storm
sewers, lagoons, on land, or into other nonmunicipal waste
streams.
2. Municipal Dischargers. - There are establishments
which are discharging their effluent into municipal sanitary
systems.
Establishments have been segmented into two groups based
on analysis of census data. This data quantifies the volume of
water discharged to municipal waste systems and to points other
than municipal systems. The studies indicated that approximately
77 percent of the industry discharges to municipal systems and
the balance direct to streams or navigable water.
A survey conducted by the National Association of Metal
Finishers of 191 of their member establishments gives support
to the decision to employ census data for distribution of plants
between direct dischargers and municipal dischargers. This
survey indicated that 75 percent of the establishments stated
-------
1-43
that their point of discharge is to municipal sewer systems.
Table 1-14 below, presents the results of the NAMF survey in
more detail.
Table 1-14
Summary of Waste Stream
Disposal Methods by NAMF Plants
Number of
Disposal Method Establishments
Municipal Sanitary Sewer
Storm Sewer
Land Disposal
Lagooning
Natural Lakes , Streams
Others
Total
143
24
5
3
10
6
191
Percent
of Total
75%
12
3
2
5
3
• 100%
Source: EPA Report 12210 E/E 03/71
The census report estimate of 77% municipal dischargers
will be utilized in this report for analysis. On this basis,
the number of direct and municipal dischargers by establishment
size is shown in Table 1-15 on the following page. The esti-
mated number of metal finishing establishments by process
segment, plant size, and type of discharge is presented in
Exhibit 1-15.
-------
1-44
Table 1-15
Estimated Number of Metal Finishing Plants
by Plant Size and Type of Discharge -
1967
Establishment 817,6 by
Number of Errployees
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 - 500
Total
Type of
Direct Dischargers
86
38
37
40
11
4
1
217
Discharge
. Municipal Dischargers
290
129
126
131
35
19
3
733
Source: Exhibit 1-15
IMPACT
SEGMENTATION
The purpose of impact segmentation is to consider what
factors may lead to a differential economic impact on establish-
ments due to their varying circumstances and to segment the
industry by such major factors insofar as possible. This
develops a sound data base for metal finishing industry estab-
lishments against which to assess economic impact.
Metal finishing establishments can be categorized by the
characteristics of their firms and plant operations. The most
common characteristics are:
-------
1-45
- "Independent" versus "Captive" Establishments
- Level of Integration
- Multi or Single Plant Operations
- Number of Products
- Level of Diversification
- Level of Specialization
- Level of Automation
- Production Capacity
- Establishment and/or Firm Size
- Type of Process
- Point of Discharge
- Space Constraints
Each of the above impact segmentation factors is reviewed
and the rationale for selecting these factors is provided in
Appendix B - Impact Segmentation Factors. Most of these factors
do not appear to give rise to significant differential impact.
However, several fac.tors are important to impact assessment
and one - establishment size - is critical.
Because there are diseconomies of scale of pollution invest-
ment and financing at low business volumes, there is a serious
differential impact. Thus, small firms may be differentially
impacted.
-------
1-46
Size can be reflected in capacity or sales volume measures.
Consistent capacity measures are unavailable. Sales volume in
the metal finishing industry appears to vary in direct relation-
ship to the number of employees. Exhibit 1-16 shows the relation-
ship for the plants interviewed for this survey. These interviews
further indicate that:
1. Industry pricing is primarily labor based; as more
man-hours are required, the price of metal finishing increases.
2. A relatively few products are priced on basis of
materials or equipment; the only exceptions are automated shop
products and precious metals.
3. Support operations, such as buffing and polishing,
add to the cost of the service. If products require extensive
mechanical cleaning, the added labor, plus overhead, increases
the sales volume without adding to the number of pieces plated.
4. Small metal finishing plants are labor rather than
capital intensive operations. Thus employment is an excellent
classifier of level of activity in this industry.
Several additional impact factors must be considered since
they may contribute to a differential impact.
1. Type of Process. Battelle Columbus Laboratories
projected different costs to meet the proposed effluent guide-
lines for each metal finishing process. Process types can be
easily segmented. However, in terms of the final economic
-------
1-47
impact assessment, differential impact will depend on the
treatment cost differences of the six process types.
2. Point of Discharge. Municipal dischargers may
have different effluent guidelines applied for pretreatment than
direct dischargers. Municipal dischargers may also have user
charges to pay in addition to treatment costs. These cost
differences may give rise to differential impacts.
The other factors in the above listing (page 1-45) do not appear
to have potential for generating significant differential impact.
On this basis, metal finishing plants will be segmented by an
employment categorization, type of process and point of effluent
discharge for the analysis economic impact.
SUMMARY
The important metal finishing processes included in this
study are cadmium plating, precious metal plating, anodizing,
pickling, phosphatizing and etching.
Demand for metal finishing services is generated by a
requirement for products with the physical properties which
metal finishing provides, such as conductivity, corrosion
resistance, durability and/or decoration. Each metal finishing
process covered in this study provides one or more of these
basic physical properties. The potential for metal finishing
final product substitution or import substitution due to
-------
1-48
increased costs is very limited. The most likely category
for product or import situations is fasteners.
The major industries using metal finishing services are
the aircraft, appliance, architectural, automotive, electronics,
fasteners, hardware, jewelry, nameplate, radio, small arms
components, steel forging and television industries.
The most important metal finishing industry size character-
istics, according the 1967 Census of Manufactures, are summarized
below:
Value of Shipments - $303.5 Million
*
Value Added by Establishment - $175.7 Million
Total Establishments - 950
Total Employment - 17,054
Metal finishing plants are located in nearly all 50 states;
however, the major concentration is in the principal industrial
areas in the Midwest, Northeast and Western seaboard.
Approximately 77 percent of the metal finishing industry
establishments discharge effluent into municipal systems and
the balance discharge to streams or navigable water.
Metal finishing plants will be segmented by size category
by employment, categorization, type of process and point of
discharge for the analysis of economic impact.
-------
EXHIBIT 1-1
ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING INDUSTRY
Sources of Data
Robert Morris Associates, Annual Statement Studies
Census of Manufacturers, United States Department of Commerce,
1958, 1963, 1967 and 1972.
Enterprise Statistics - 1967
Annual Survey of Manufacturers - 1970
National Association of Metal Finishers - 1970
Operating Cost Survey
"Business and Economic Evaluation of the Metal Finishing
Industry," Michigan Business Reports Number 52, Graduate
School of Business Administration, University of Michigan
Electroplating Engineering Handbook, Graham
Reinholt Publishing Company,1972
"Development Document for Effluent Limitations
- Guidelines and Standards of Performance - 1974,"
Battelle Columbus Laboratories
Pollution Control in Metal Finishing - 1973,
Watson, Noyes Data Corporation
Industrial Pollution Control Handbook, Lund,
McGraw Hill
"The Plating and Polishing Market,"
Morton Research Corporation, 1973
Metals Handbook, Volume 2
American Society for Metals, 1964
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ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING INDUSTRY
INDUSTRY CONTACTS
EXHIBIT 1-2
Page 1 ot J
Banks
American National Bank Chicago,
Chemical Trust Company New York
Continental Bank of Alhambra Alhambra
Continental Bank and Trust Company Chicago,
Detroit Bank and Trust Company Detroit,
First National Bank of Chicago Chicago,
First National City Bank New York
Long Island Trust Company New York
National Boulevard Bank Chicago,
Illinois
, New York
, California
Illinois
Michigan
Illinois
, New York
, New York
Illinois
Metal Finishing Establishments
AA Metal Products
Accurate Tumbling
Action Plating
Admiral Plating
Advance Plating
Aetna Plating
Albert's Plating Works, Inc.
Alco Cad Nickel
Amrock Corporation
Atlas Plating
Automation Plating
Berteau Lowell
Cadillac Plating
Calco Company
Cambridge Plating Company
Cadon Plating
Castle Metal Finishing
Chem Plate
Chemnetics, Inc.
Corrosion Control
Craftsman Plating and Tinning
Crescent Plating
Crown City Plating
Electro Glo Company
Electronics Metal Finishing
Enam-coat
Chicago, Illinois
Hamtramk, Michigan
Franklin Park, Illinois
Long Island City, New York
Schiller Park, Illinois
Chicago, Illinois
Brooklyn, New York
Los Angeles, California
Rockford, Illinois
New York, New York
Glendale, California
Chicago, Illinois
Warren, Michigan
Chicago, Illinois
Belmont, Massachusetts
Wyandotte, Michigan
Schiller Park, Illinois
Los Angeles, California
Palo Alto, California
Melrose Park, Illinois
Chicago, Illinois
Chicago, Illinois
Temple City, California
Chicago, Illinois
Danbury, Connecticut
Highland Park, Michigan
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EXHIBIT 1-2
Page 2 of 3
Metal Finishing Establishments
F & B Manufacturing Company
Federal Fabricators
Foss Plating
Gem Coat, Inc.
General Anodizing
General Finishing
General Super Plate
General Tinning
Gilbertson
Graham Plating
Grand Plating
Industrial Plating Company
James Precious Metal Plating
J. D. Plating
Jennings Plating
J & S Plating
Kar-Rite Corporation
K. C. Jones Plating
Keystone Corporation
Krel Laboratories
Metal Surfaces
Metal Surfaces, Inc.
Microplate
Modern Plating
Motorola Corporation
Northwestern Plating
Plating For Electronics
Queens Plating
Rampart Industries
Reilly Plating Company
Reliable Plating Corporation
Riverdale Plating and Heat Treating
Security Plating and Tinning
Eric S. Turner and Company, Inc.
West Electroplating
Marlet Plating
Service Plating
Chicago, Illinois
Chicago, Illinois
Santa Fe Springs, California
Chicago, Illinois
Chicago, Illinois
Chicago, Illinois
East Syracuse, New York
Chicago, Illinois
Chicago, Illinois
Chicago, Illinois
Chicago, Illinois
Seattle, Washington
Chicago, Illinois
Madison Heights, Michigan
Los Angeles, California
New York, New York
Chicago, Illinois
Detroit, Michigan
Buffalo, New York
Chicago, Illinois
Bell Gardens, California
Bell Gardens, California
Inglewood, California
Los Angeles, California
Franklin Park, Illinois
Chicago, Illinois
Waltham, Massachusetts
Long Island City, New York
Detroit, Michigan
Melvindale, Michigan
Chicago, Illinois
Chicago, Illinois
Chicago, Illinois
New Rochelle, New York
Cleveland, Mississippi
Buffalo, New York
Los Angeles, California
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EXHIBIT 1-2
Page 3 of 3
Industry Associations
American Electroplaters Society
Chicago Electroplaters Institute
Finishers Trade Institute
Institute of Printed Circuits
Masters Electroplating Association
National Association of Metal
Finishers
East Orange, New Jersey
Chicago, Illinois
Chicago, Illinois
Evanston, Illinois
Long Island City, New York
Upper Montclair, New Jersey
Others
Gurnham and Associates, Consultants
Metropolitan Sanitary District of
Greater Chicago
Mr. Scott Modjeska, Consultant
Small Business Administration
Chicago, Illinois
Chicago, Illinois
Chicago, Illinois
Detroit, Michigan
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EXHIBIT 1-3
ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING INDUSTRY STATISTICS
SIC CODE 3471 • 1958-1972
Specific Industry Statistics
Number of Establishments
Establishments under 20
Employees
Establishments over 20
Employees
Percent of Total Establish-
ments with over 20
Employees
Number of Employees
Value Added by Manufacturing
(Millions)
Value of Shipments (Millions)
Capital Expenditures
(Millions)
Electric Power Consumed
(Million KWH)
Water Intake (Billion Gallons)
Averages per Plant
Average Number of Employees
Average Value Added
Average Value Shipments
Average Capital Expenditures
1958
2,646
2,104
542
20.5%
36,500
$253.8
$359.1
$ 15.9
515
N.A.
14
$ 96,000
$136,000
$ 6,000
1963
3,023
2,346
677
22.4%
45,000
$370.2
$517.6
$ 20.0
661
5.0
15
$123,000
$171,000
$ 6,600
1967
3,241
2,386
855
26.4%
55,100
$574.8
$791.1
$ 33.1
893
7.5
17
$177,000
$245,000
$ 10,200
1972
3,220
2,425
795
24.7%
53,300
$ 749.1
$1,045.0
$ 41.0
1,570
N.A.
17
$233,000
$325,000
$ 12,700
Average Electric Power
Consumed (KWH) 195,000 219,000 275,000 488,-000
Average Water Intake
(Thousand Gallons) N.A. 1,650 2,310 N.A.
Source: Census of Manufactures, United States Department of
Commerce, 1958, 1963, 1967 and 1972.
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EXHIBIT 1-4
ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING INDUSTRY STATISTICS
SIC CODE 3479 .
1958-1972
Year
Specific Industry Statistics
Number of Establishments
Establishments under 20
Employees
Establishments over 20
Employees
Percent of Total Establish-
ments with over 20
Employees
Number of Employees
Value Added by Manufacturing
(Millions)
Value of Shipments (Millions)
Capital Expenditures
(Millions)
Electric Power Consumed
(Million KWH)
Water Intake (Billion Gallons)
Averages per Plant
Average Number of Employees
Average Value Added
Average Value of Shipments
Average Capital Expenditures
Average Electric Power
Consumed
Average Water Intake
1958
1,003
811
192
19.1%
15,700
$108.4
$196.4
$ 4.7
142
N.A.
16
$108,000
$196,000
4,700
142,000
N.
1963
1,258
982
276
21.9%
20,700
$184.6
$322.1
$ 8.7
176
N.A.
17
$147,000
$256,000
6,900
140,000
A. N.A.
1967
1,443
1,094
349
24.2%
26,200
$289.6
$471.3
$ 22.0
247
.6
18
$201,000
$327,000
15,300
171,000
420
1972
1,457
1,107
350
24.0%
25,900
$377.6
$650.9
$ 22.7
430
N.A.
18
$259,000
$448,000
15,600
295,000
N.A.
(Thousand Gallons)
Source: Census of Manufactures, United States Department of
Commerce, 1958, 1963, 1967 and 1972.
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EXHIBIT 1-5
ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING INDUSTRY STATISTICS
SIC CODES 3471 AND 3479 . 1958-1972
Year
Specific Industry Statistics 1958 1963 1967 1972
Number of Establishments 3,649 4,281 4,684 4,677
Establishments under 20
Employees 2,915 3,328 3,480 3,532
Establishments over 20
Employees 734 953 1,204 1,145
Percent of Total Establish-
ments with Over 20
Employees 20.1% 22.3% 25.7% 24.5%
Number of Employees 52,200 65,700 81,300 79,200
Value Added by Manufacturing
(Millions) $362.2 $554.8 $864.4 $1,126.7
Value of Shipments
(Millions) $555.5 $839.7 $1,262.4 $1,695.9
Capital Expenditures
(Millions) $ 20.6 $ 28.7 $ 55.1 $ 63.7
Electric Power Consumed
(Million KWH) 657 837 1,140 2,000
Water Intake (Billion
Gallons) N.A. 5.0 8.1 N.A.
Averages Per Plant
Average Number of Employees 14 15 17 17
Average Value Added $ 99,000 $130,000 $185,000 $241,000
Average Value of Shipments $152,000 $196,000 $270,000 $363,000
Average Capital Expenditures $ 5,700 $ 6,700 $ 11,800 $ 13,600
Average Electric Power
Consumed (KWH) 180,000 196,000 243,000 428,000
Average Water Intake
(Thousand Gallons) N.A. 1,200 1,700 N.A.
Source: Census of Manufactures, United States Department of
Commerce, 1958, 1963, 1967 and 1972.
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ENVIRONMENTAL PR01ECTION AGENCY
METAL FINISHING ESTABLISHMENTS BY SIC CODE
AND ESTABLISHMENT SIZE BY NUMBER OF EMPLOYEES
Establishment
Size by Number
of Employees
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 - 500
500 - 999
Electro-
plating(l)
924
426
433
463
128
42
6
1
Polishing
and
Buffing(2)
70
30
31
33
8
2
-
-
SIC Code 3471
Shot
Blasting(2)
7
4
4
4
2
-
-
-
Cadmium
Plating
41
19
19
21
7
2
-
-
Precious
Metal
Plating
58
27
27
29
8
2
1
-
Anodizing
137
64
65
70
18
6
2
-
Total
SIC Code
3471
1,237
570
579
620
171
54
9
1
SIC
Code 3479
Galvanizing
Painting (3)
232
91
80
84
26
17
1
1
and
Tinning (3)
180
75
61
65
24
11
-
-
Enamel-
ing (3)
72
29
25
26
8
7
1
-
Pickling
33
14
12
13
4
3
1
-
Phospha-
tlzing
15
6
5
5
2
2
-
-
Etching
92
37
35
33
7
8
-
_
Total
SIC Code
3479
624
252
218
226
71
48
3
1
Total
2,423
174
21
109
152
362
3,241
532
416
168
80
35
212
1,443
Total
1,861
822
797
846
242
102
12
2
4,684
Notes: (1) These plants were covered in the "Economics Analysis of Effluent Guidelines in the Electroplating Industry" study.
(2) Polishing and buffing and shotblasting are nonaqueous processes and therefore do not fall under the proposed effluent guidelines.
(3) Not covered by the Battelle Columbus Laboratories report "Development Document for Effluent Limitations, Guidelines and Standards of Performance
for the Metal Finishing Industry."
Source: Census of Manufactures, United States Department of Commerce, 1967 and Kearney estimates.
M
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IT!
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ENVIRONMENTAL PROTECTION AGENCY
SIC
Code
19
25
33
34
35
36
37
38
39
END
Industry
Ordnance
USES OF METAL FINISHING SERVICES BY
Classification Conductivity
Furniture and Fixtures
Primary Metal
Industries X
Fabricated Metal Products X
Machinery Except Electrical
Electrical and
Transportation
Electronic Equipment X
Equipment X
Instruments and Related Parts X
Miscellaneous
Manufacturing Industries X
INDUSTRY SEGMENTS
Type of Finish
Corrosion
Protection Durability Decoration
X X
X X
X X
XXX
XXX
X X
XXX
XXX
XXX
Source: Metal Working Market Guide.
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EXHIBIT 1-8
ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING ESTABLISHMENT CHARACTERISTICS
BY PROCESS TYPE
Metal Finishing
Process Type
Cadmium Plating
Precious Metal
Plating
Anodizing
Pickling
Phosphatizing
Etching
Total
Number of
Employees
1,863
2,724
6,491
1,760
705
3, 511
17,054
Value of
Shipments
(Thousands)
$ 30,300
43,900
105,100
38,300
14,900
71,000
$303,500
Value of
Shipments
per
Employee
(Thousands)
16.2
16.1
16.2
21.8
21.1
20. 2
Value Added
by Manufacture
(Thousands)
$ 19,300
26,600
64,200
16,100
7,000
42,500
$175,700
Value Added
As a Percent
of the Value
of Shipments
72.6%
71.7
72.3
61.7
61.4
61.4
Source: Census of Manufactures, United States Department of Commerce,
1967, and Kearney estimates.
-------
ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING ESTABLISHMENT CHARACTERISTICS
BY NUMBER OF EMPLOYEES
Establishment
Size
by Number
of Employees
1- 4
5- 9
10- 19
20- 49
50- 99
100-249
250-500
Total
Number of
Employees
659
1,119
2,300
5,301
3,055
3,220
1,400
17,054
Value of
Shipments
(Thousands)
$ 15,500
17,000
33,000
84,100
56,100
71,500
26,300
$303,500
Value of
Shipments
per
Employee
(Thousands)
23.5
15.2
14.3
15.9
18.4
22.2
18.8
Value Added
by
Manufacturer
(Thousands)
$ 9,000
11,000
21,300
51,400
31,000
34,000
18,000
$175,700
Value Added as a Percent
of the Value
of Shipments
81.8%
73.3
73.5
70.5
64.6
60.7
66.9
Sources: Census of Manufactures, United States Department of Commerce, 1967
and Kearney estimates.
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EXHIBIT I-H
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ENVIRONMENTAL PROTECTION AGENCY
\ x
LOCATION OF METAL FINISHING ESTABLISHMENTS
NEW
V ENGLAND
A wy
,
MIDDLEI
ATLANTIC..'
WEST NORTH tgNTRAL
AST
fTcKSOUTH
21 CENT
TENNESSEE
4.—
*E~ —
_ OKLAHOMA
TEXAS !
WEST SOUTH: CENTRAL/ r-plMT""^ SsCAROUNA '
1. 45 ! / TALABAM/tGEORG,A\.cOUTH i
Source: Census of Manufactures, U.S. Department of Commerce, 1967
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EXHIBIT 1-13
Page 1 of 3
ENVIRONMENTAL PROTECTION AGENCY
DISCUSSION GUIDE FOR METAL FINISHING
ESTABLISHMENTS
Company Name
1. What metal finishing services do you perform?
Cadmium Plating
Anodizing
Precious Metal Plating (Gold, Silver)
Phosphatizing
Etching
Tin, Iron, Lead Plating
Pickling
Electroplating and Electropolishing
2. What types of metal finishing equipment do you operate?
A. Automatic or manual
Rack or barrel
B. Percent of sales volume in each group
Rack
Barrel
3. Is there a minimum or maximum order which you will accept?
If so what are they?
Minimum
Maximum
4. How many people work in your plant?
5. Who are your major customers?
A. Names
-------
EXHIBIT 1-13
Page 2 of 3
B. Industry categories
Electronics
Automotive parts
Aircraft parts
Household appliances
Radio-TV
Food equipment
Plumbing
Building and constructing
others
C. Types of products you finish
Castings or forgings
Nuts and bolts
Fabricated parts
Jewelry
Printed circuit boards
Other (specify)
6. How are metal finishing services priced?
Competitive published standard costs for services
Competitive nonpublished pricing
Negotiated price on a job basis
What the market will bear
7. (Explain projected 10% to 20% ($ &/or %) increase due to
pollution control costs)
Would you be able to raise the capital to install the neces-
sary equipment? How?
8. How would you cover these increased costs?
Adsorb
Adsorb some and pass some on to customers
Pass all costs on to customers without an allowance
for profit
Pass all costs plus allownace for required profit on
to customers
-------
EXHIBIT 1-13
Page 3 of 3
9. Please identify your major competitors?
A. Names
B. Approximate employment
C. Approximate annual sales
10. What are your approximate annual sales?
11. What criteria do you use to set profit objectives?
Return on sales
Return on investment
12. Is one type of metal finishing process more profitable than
another?
Why?
13. Please estimate your percentage net profit over the past three
to five year period.
Has there been an increasing or decreasing trend?
14. What is the present book value of your company?
How much of this is represented by real property?
15. What is the approximate average age of your equipment
(excluding real estate)?
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EXHIBIT 1-14
Page 1 of 3
ENVIRONMENTAL PROTECTION AGENCY
DISCUSSION GUIDE FOR METAL FINISHING
CUSTOMERS
Company Name
Principal products that are metal finished_
1. What metal finishing services do you use?
A. Which services are purchased?
B. Which services do you perform internally?
2. Who are your metal finishing suppliers (number and rarae)?
A. Estimated approximate number of employees?
B. Estimated amount of business that your firm does
with each supplier?
C. Estimated approximate distance from suopliers
locations?
3. How do your metal finishing suppliers usually determine
their prices?
Competitive published standard costs for services
Competitive nonpublished pricing
Negotiated price on a job basis
What the market will bear
4. Would you have a metal finishing supply problem if one
(two-three) supplier(s) was forced to close down?
5. Is the size of a metal finishing supplier a major facto,
in determining whether or not he is able to adequately
service your metal finishing requirements?
6. Does the size of a metal finishing supplier infliaence:
A. His price? How?
B. His delivery time? How?
C. His metal finishing quality? How?
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EXHIBIT 1-14
Page 2 of 3
7. In selecting a metal finishing supplier do you require
specialized finishing equipment such as automatic versus
manual production facilities or barrel versus rack finish-
ing.
A. For what reasons do you require Automatic or Manual?
Price
Order Size
Others
B. Why do you specify Rack of Barrel?
Price
Order Size
Product Shpae
Others
8. Are there possible practical substitutes for the metal finish-
ing services you presently purchase?
If so, what are they?
9. What would your reaction be to a 1070 to 20% increase in the
price of metal finishing services from your present suppliers
(due to pollution control regulations)?
Continue to purchase metal finishing services from
present suppliers.
Seek out new metal finishing suppliers.
Reduce your use of metal finishing services (by reduction
of amount of coating on the product).
Reduce your use of metal finishing services (by reduction
of full coating on certain parts of the product)
Reduce your use of metal finishing services (by discontinu-
ing the coating of certain products).
Discontinue metal finishing services.
Start your own metal finishing facility.
10. If a 10% to 20% price increase would not result in your chang-
ing your metal finishing supply patterns, at what point would
you become price sensitive?
11. Would a price increase of 10% to 20% result in a price
structure that would give importers a competitive advantage
in your product line? If so, which of your products would be
affected?
What is your estimate of the magnitude of this advantage?
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EXHIBIT 1-14
Page 3 of 3
12. What percentage of your final product cost does metal finish-
ing reporesent?
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ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED NUMBER OF METAL FINISHING PLANTS BY
PROCESS SEGMENT AND TYPE OF DISCHARGE - 1967 \1>
Establishment
Size by Number
oi Employees
1-4
5-9
10-19
20-49
50-99
100-249
250-500
Total
Process Segment
Cadmium I
Direct
Discharger
9
4
4
5
2
-
I
_24
'latnig^ Precious Me
Municipal Direct
Discharger Discharger
J2 13
15 6
15 6
16 7
5 2
2
I I
85 _3_4
tal Plating^
Munic ipal
Discharger
45
21
21
22
6
2
1
US
Anodi
Direct
Discharger
32
15
15
16
4
1
1
M
zing
Municipal
Discharger
105
49
50
54
14
5
1
238
Pick
Direct
Discharger
8
3
3
3
1
1
I
i9
lin^ Phosphi
Municipal Direct
Discharger Discharger
25 3
11 1
9 1
10 1
3
I
1
fil 1
atizing
Municipal
Discharger
12
5
4
4
2
2
_2
23
Etct
Direct
Discharger
21
9
8
8
2
2
_I
Jfi
ling
Municipal
Discharger
71
28
27
25
5
6
-
m
Total
Direct
Discharger
86
38
31
40
11
4
1
m
Municipal
Discharger
290
129
126
131
35
19
3
733
Notes: (1) Distribution by type of discharge is based on a 1TL municipal and 237=, direct discharger factor for all
process segments in accordance with census data for the industry. The table numbers reflect applying
77% rounded throughout.
Source: Bureau of the Census and Exhibit 1-6.
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ENVIRONMENTAL PROTECTION AGENCY
3M-i
2M-
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1M-
CORRELATION OF SALES VOLUME AND
ESTABLISHMENT SIZE BY NUMBER OF EMPLOYEES
• (1)
(1)
—r~
60
—r~
70
—r~
10
—I—
20
—i—
30
—i—
40
50
80
Note: (1) These outlying points were reported and used; however
the variation is attributed to reporting inconsistencies
Source: Dun & Bradstreet data, and
Kearney Survey Interviews.
(-3
M
I
-------
II - FINANCIAL CHARACTERISTICS
OF THE FIRMS IN THE INDUSTRY
Financial information pertaining to firms in the metal
finishing industry is limited because many firms which provide
metal finishing services are small, closely held and consider
financial information confidential. Most of the firms which do
report financial data usually do not break it down by plant and
product line. Moreover, the data available does not permit
a breakdown by industry process.
The metal finishing industry falls primarily into two Stan-
dard Industrial classification codes which are 3471 and 3479.
These SIC codes generally contain other industry categories in ad-
dition to the metal finishing industry as defined for this
study(l). Where possible, financial characteristics have been
presented for metal finishing plants only. Some financial in-
formation is available only for the entire 3471 and 3479 SIC
code categories. All subsequent tables and exhibits will indi-
cate whether the information pertains to the metal finishing
industry only or to the aggregate SIC 3471 and SIC 3479 cate-
gories. There is no reason to believe that aggregate figures
will be inaccurate or misleading.
(1) See page 1-13
-------
II - 2
The financial information which is available has been
verified and/or supplemented by direct contacts with individual
firms. Sources for all financial information are documented
where the information is presented.
Kearney's analysis of the financial characteristics of the
firms in the industry is developed under the following subject
headings:
General Financial Characteristics
Operating Revenues
Profitability
Value of Assets
Profit Margin Constraints
Financing Additional Capital Requirements.
GENERAL FINANCIAL
CHARACTERISTICS
The number of metal finishing firms, number of employees ,
value of shipments and value added by manufacturer by firm size
is presented in Table II-l on the following page.
-------
II - 3
Table II-l
Metal Finishing Industry
General Financial Statistics - 1967^ '
Firm Size by
Number of
Employees
1
5
10
20
50
100
250
4
9
- 19
- 49
- 99
- 249
- 499
Total
Number of
Firms
Total Number
Employees
Value of
Shipments
Value Added
by Establishments
(Millions ot $) (Minions or ;?;
376
167
163
171
46
23
4
950
659
1,119
2,300
5,301
3,055
3,220
1,440
17.054
$ 15.5
17.0
33.0
84.1
56.1
71.5
26.3
$303 . 5
$ 9.0
11.0
21.3
51.4
31.0
34.0
18.0
$175.7
Note: (1) Financial information presented in this table pertains to
the metal finishing industry only.
Source: Exhibit 1-5 and 1-8.
The financial data in the table indicate the basic industry
structure being studied. Total shipments were about $300 million
from 950 establishments employing about 17 054 employees in
1967. Small establishments with under 10 employees represent 57%
of the total firms but have only about 10% of the employment and
shipments.
OPERATING
REVENUES
A characterization of the financial position of firms in
the metal finishing industry by firm size has been developed.
This includes an estimate of average sales, current assets,
current ratio and working capital.
-------
II - 4
The average sales volume by establishment size was deter-
mined using the data collected from plant interviews and
financial sources. Exhibit 1-14 illustrates the correlation
between sales and number of employees which was utilized in
computing average sales statistics.
Exhibit II-1 contains the pertinent information for each
group. This exhibit shows that the average sales by employment
category range from $53,700 to $6.5 million. Kearney's
survey of 60 metal finishing plants indicates that the fluctuation
in sales for the small establishments was substantial. A
deviation of 50% occurred because of the method of reporting
sales, specialized shops and management differences.
The slightly larger 5 to 9 man establishments have more than
twice the sales volume of the 1 to 4 man establishments without a
comparable change in current assets or current ratio. For the
larger establishments the current assets steadily increase accord-
ing to establishment size. Since data was limited, the current
assets for establishments with more than 250 employees was not
available.
The ratio of current assets to current liabilities increases
with firm size. Thus larger firms are definitely financially
stronger. The working capital also increases with firm size,
which indicates the small firm may be at a relative disadvantage
when investment flexibility is needed.
-------
II - 5
To describe the typical metal finishing operation in
terms of fixed and variable costs will be useful in determining
financial criteria for possible closure impact. The National
Association of Metal Finishers (NAMF) surveyed 112 metal finishing
firms in 1972 ("Survey of Operating Costs - 1972"). The percentage
relationships in this survey have been applied to the data in
Table II-2 to develop estimates of fixed and variable costs.
Costs are shown for each firm size in Table II-2. Rent
payments on long-term leases, interest payments on debt accumulated,
office salaries, and other miscellaneous expenses are considered
fixed costs for this analysis.
Table II-2
Fixed and Variable Operating Costs
Firm Size by Fixed Cost Variable Cost Total Cost Gross Profit
Number of as Percent as Percent as Percent Before Tax as
Employees of Sales of Sales of Sales Percent of Sales
1 -
5 -
10 -
20 -
50 -
100 -
250 -
4
9
19
49
99
249
499
18.5%
20.8
17.3
12.3
9.7
6.6
6.6
68 . 3%
70.5
77.3
82.3
84.1
89.3
89.3
86.8%
91.3
94.6
94.6
93.8
95.9
95.9
13.2%
8.7
5.4
5.4
6.2
4.1
4.1
Source: NAMF, 1972.
From the table note the following:
1. The fixed cost as a percent of sales decreases from
18.5% to 6.6% as firm size increases. Therefore, the smaller
establishments carry a higher fixed cost relative to the large
firms.
-------
II - 6
2. Variable costs increase with firm size from 68.3%
in a 1 to 4 man shop to 89.3% in a 250 to 499 man establishment.
3. Total operating cost as a percent of sales
increases with firm size.
4. The gross profit before taxes is largest for the
small firm at 13.2%. Gross profit decreases as the firm size
increases.
The percentages of Table II-2 are transformed into average
dollar values using the sales figures of Exhibit II-l.
Table II-3
Fixed and Variable Operating Costs
(1973 Dollars)
Firm Size by Fixed Cost Variable Cost Total Cost Variable Cost
Number of Average Dol- Average Dol- Average Dol- As Percent of
Employees lar Value lar Value lar Value Total
1 -
5 -
10 -
20 -
50 -
100 -
250 -
4
9
19
49
99
249
499
$ 9,940
30,430
49,250
73,800
122,510
194,040
433,360
$ 36,700
103,140
220,100
493,800
1,062,200
2,625,400
5,863,400
$ 46,640
133,570
269,350
567,600
1,184,710
2,819,440
6,296,760
78.6%
77.2
81.7
87.0
89.6
93.1
93.1
Source: NAMF, 1972
From the table note that:
1. The dollar value of fixed and variable costs in-
creases with firm size as is expected.
2. The variable cost as a percent of the total ap-
pears to increase with firm size from 78.6% to 93.1%.
-------
II - 7
PROFITABILITY
(a) Profits as a
Percent of Sales
and Assets
Distribution of profits after tax by firm asset size was
available for the combined electroplating and metal finishing
industry. However, a specific breakdown was not available for
the metal finishing industry. Table II-4 summarizes available
profit data. The data in Exhibit II-l was utilized to correlate
asset size and establishment size.
Table II-4
Distribution of Profits After Tax
(as Percent of Total Assets)
by Firm Asset Size, 1969-1972(1)
Asset Size Categories
(Thousands of Dollars)
Year
1969
1970
1971
1972
Less than
4
0
2
0
.47,
.6
.9
.3
S250
§250 - $1,100
2.3%
4.1
2.3
2.3
?1,000 -
4.
4.
2.
3.
$10
9%
0
7
8
,000
Note: (1) Financial information presented pertains to SIC
3471 and 3479.
Source: Robert Morris, 1969-1973.
From the table note that:
1. These smaller firms with less than 20 employees
and with assets less than $250,000 have significant fluctuations
in profits and seem to be highly sensitive to the general
economic environment.
-------
II - 8
2. The larger establishments of 20 or more employees
or assets above $250,000 show a more stable profit record in
relation to changes in the business environment.
3. Larger companies of 20 or more employees enjoy a
higher profit in terms of percent of assets. They are also more
capital intensive per unit of sales.
(b) Pro Forma
Income Statements
To further describe metal finishing shops income statements
have been developed for each firm size. This data, which was
compiled using the National Association of Metal Finishers
report and a Kearney survey, is presented in Exhibits II-2 and
II-3. Summary statistics on production expense, operating
expense, and profits are contained in Table II-5, on the following
page.
-------
II - 9
Table II-5
Summary Statistics on Production Expense
Operating Expense and Profits
_(1973 Dollars)
Firm Size
by Number
of Employees
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 - 499
Note: (1)
Production
Expense (1)
$ 32,240
97,000
195,300
443,000
951,000
2,372,600
5,299,000
Production expense inc
Operating
Expense (2)
$ 14,370
36,580
74,020
123,000
233,660
443,940
991,470
ludes cost of
Profit
After Taxes
$ 4,490
9,060
8,550
17,800
42,980
76,420
170,470
materials ,
labor wages, utilities, and other typical
production expense.
(2) Operating expense includes officers' salaries,
administrative salaries, selling expenses and
other administrative expense.
Source: Exhibit IT-3
The following points should be noted:
1. The dollars of profits increase rapidly for
establishments with more than 50 employees. The establishments
with 1 to 4 employees have small dollar profits and the estab-
lishments with 10 to 19 employees actually receive less dollar
profits than the 5 to 9 man establishments. However, the small
establishments have incorporated owners' salaries into expenses,
thus deflating profit values.
-------
II - 10
2. Production expenses are at least twice as high
as the operating expenses of each firm size category.
The fluctuation in profit and production expense is
substantial and Table II-6 illustrates the range associated
with each.
Table II-6
Variation in Production
Expense and Profits
Profit Production Expense
As Percent of Sales As Percent of Sales
Firm Size
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 - 499
Average
8.3%
6.2
3.0
2.9
3.4
2.6
2.6
High
14.0%
21.0
12.7
18.0
12.7
5.0
5.0
Low
0.0%
(1.2)
(12.4)
(15.0)
(1.0)
(1.0)
(1-0)
Average
60 . 0%
66.3
68.6
73.9
75.3
80.7
80.7
High
70.0%
80!6
82.0
91.5
89.2
86.8
86.6
Low
48 . 3%
49.4
54.5
54.5
44.4
66.7
66.7
Source: National Association of Metal Finishers, 1972.
From the table note that:
1. The production expense as a percent of sales in-
creases with firm size. This is expected since larger plants
have higher production expenses proportionally.
2. Although profit as a percent of sales is highest
for the small firm, the dollar volume is extremely low at less
than $5,000. (See Exhibit II-3.)
3. Profit after taxes, measured in percent of sales,
decreases from 8.35% for the 1 to 4 man establishment to 2.6%
for a 250 to 499 man establishment.
-------
II - 11
4. Small establishments show large fluctuations
because of the managerial policies in adapting to market trends
or to variation in business volume without change in overhead
and fixed costs.
There appear to be competitive pressures which affect the
ability of the establishment owner to eliminate losses due to
cost changes. Because the small firms compete actively, increases
in labor or material costs are not always passed immediately to
the buyers of metal finishing services. This is especially true
in the metropolitan areas. Since labor is not completely
organized in the industry, wages may not all rise simultaneously,
and a firm experiencing rising wages may not be able to increase
prices without some loss of customers due to price competition.
Small establishment owners are fairly unsophisticated with
respect to modern cost accounting methods. For example, in a
small plant where direct costs are based on labor and materials,
with labor being the significant variable, if the level of
production changes significantly, overhead may not be absorbed
completely and profits may suffer until an accounting cycle is
completed. Production record keeping is relatively uncommon,
and the emphasis in the plant is usually on providing fast
turnaround for the customer rather than maintaining a standard
output per unit of labor throughout the plant.
-------
II - 12
After the financial results of operation are reported,
which is infrequently, firm owners may realize that profit
problems exist. Only then are price changes or other steps
taken to improve earnings.
It should be noted that no specific pattern has been estab-
lished with regard to profitability according to type of metal
finishing or specialization. Many establishments maintain
diverse operations and the limited data do not indicate a pattern
for any group. Operating costs are not proportionally different
for any process segment previously described, and therefore,
profits distribution is not determined by process.
(c) Pro Forma
Balance Sheets
To complete the description of the firms in the metal
finishing industry, a balance sheet has been developed by firm
size. Exhibit II-4 contains these balance sheet figures which
are representative of the typical firm.
The asset size of these firms varies from $50,000 to
$1,700,000. Figures do not appear for the largest plant size
because information was extremely limited for this group.
VALUE OF
ASSETS
Metal finishing industry total assets, equity, debt to net
worth and average annual capital expenditures by firm size are
presented in Table II-7.
-------
II - 13
The values for total assets are taken from Exhibit IT-4,
equity values are from the Dun and Bradstreet data, and debt to
net worth ratios are used from Annual Statement Studies ^' The
average capital expenditures shown are calculated from data for
1967 in the U.S. Census of Manufactures.
Table II-7
Metal Finishing Industry
Worth Statistics by Firm Size, 1973
(1)
Firm Size
by Number
of Employees
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 - 499
Total
Assets
$ 50,000
80,000
150,000
291,000
560,000
1,700,000
-
Reported
Equity
$ 50,000
50,000
135,000
213,000
370,000
1,000,000
-
Debt/Net
Worth
1.6
1.6
1.6
1.0
1.0
0.9
0.9
Estimated
Annual Capital
Expenditure
$ 370
2,780
17,000
13,300
55,000
187,000
530,000
Note: (1) The financial information presented on total assets,
tangible net worth, and equity pertains only to the
metal finishing industry. Data on debt-to-net worth
ratio and capital expenditures pertains to SIC 3471
and 3479.
Sources: Robert Morris, Annual Statement Studies 1973
Dun and Bradstreet
Census of Manufactures, 1967
A. T. Kearney, Inc.
From the table note the following:
1. The asset description of small metal finishing
plants generally confirms all other financial information pre-
sented earlier in this section.
Note : Because this data is from different reporting sources
it does not integrate into a consistent balance sheet'
For a consistent estimate of balance sheet relation-
ship see Exhibit II-4.
-------
II - 14
2. The smallest plants (1 to 4 employees) spends ap-
proximately $370 per year in capital expenditures. On this
basis their tangible net worth appears extremely low. Plants
in the next larger category (5 to 9 employees) also spend little
on capital improvements in relation to total assets.
3. Although the capital expenditures appear low for
small plants, Robert Morris indicates that the debt to net
worth ratio is 60% higher for small plants. On this basis, the
debt incurred is a relatively higher proportion for the smaller
plants.
PROFIT MARGIN
CONSTRAINTS
Two major factors affecting profitability in many establish-
ments are the level of production obtained and the ability to
pass on increased costs. Each factor will be discussed with re-
gard to profit constraints in this section.
Although the quality of the metal finishing and the ability
of the shop to meet customer delivery requirements and specifica-
tions are important considerations, the demand for metal finishing
is not a function of industry promotion or sales effort. The metal
finishing industry is a highly dependent on other primary industries
such as electronics, automotive and housewares. In recent years as
the economy has had an upswing, many establishments began operating
at near full capacity.
-------
II - 15
At present operating rates, there is limited potential for
increasing establishment capacity without new capital expendi-
tures. If some establishments withdraw from the industry due to
pollution control costs, firms remaining in the industry could
absorb some of the metal finishing work by extending the working
hours of the plants. This alternative could, in fact, also in-
crease profitability as greater utilization is made of existing
fixed assets. However, Kearney's survey indicates that a labor
shortage exists, particularly within the metropolitan areas where
a large majority of the plants are located. The environment of
a metal finishing plant is not conducive to attracting a large
number of employees. Consequently, rather than operating two
shifts, many plants extend shifts from nine to ten hours per day,
and operate on a six-day basis. Thus, practical expansion poten-
tial is limited.
In addition to labor constraints, it should be noted that
establishments located within metropolitan areas generally have
limited expansion space and are, therefore, restricted as to
physical plant size expansion at the same location. This factor
was emphasized by firm owners in interviews. Also, extended
operating hours can create additional storage problems, particu-
larly where products are bulky or where shipments cannot be made
during the off-hours.
-------
II - 16
The ability to pass on increased costs is the key to
the profitability of the firm. When costs increase, the firm
must choose among the following alternatives:
1. Pass on increased costs plus an additional increment
to maintain the current level of,profit.
2. Pass on only increased costs.
3. Absorb a portion of the costs and pass on the
remainder.
4. Absorb all of the increased costs.
Alternatives 3 and 4 imply that the profit of the firm will
be reduced by absorbing cost increases. Alternative 2 requires
that the profit remains the same in terms of total dollars but
not in terms of return on investment, while Alternate 1 allows
the firm to maintain profitability in all respects. The firm
will, of course, select this latter alternative if competitive
market conditions permit. In circumstances where cost increases
vary for establishments some firms may be forced to accept less
profitability because of the market price.
Each of these alternatives is a possible scenario depending
upon the circumstances of the individual firm in relation to the
market. However, because profit margins are small in the metal
finishing industry, costs must be passed on, especially in
smaller establishments with less than 20 employees. The firm
-------
II - 17
cannot afford to absorb increased costs and remain in business
for any length of time. Partial or complete absorption of costs
could only be accomplished by the larger establishments where
cash flow is greater but profit percentage is lower. Since
profits are typically low in the metal finishing industry, only
Alternatives 1 and 2 are feasible ways to react to cost increases
for most establishments if they are to remain in the industry.
FINANCING ADDITIONAL
CAPITAL REQUIREMENTS
A significant investment will be required for firms in the
metal finishing industry to comply with the proposed effluent guide-
lines. Establishments will be faced with a decision to finance
the capital investment or close. If they choose to finance the
pollution control investment, then a method of raising the
capital must be selected.
The criteria considered in a financial decision and the tech-
niques for generating capital will be discussed in the following
sections.
(a) Criteria Considered in
a Financial Decision
Most investments are carefully evaluated in terms of the re-
turn offered by such an investment. Pollution control cannot be
viewed as an ordinary investment; however, it must be evaluated
as a financial investment since a firm's decision to remain open
depends directly on its ability to carry the burden of such an
investment. The following criteria are commonly used to evaluate
financial data associated with pollution control requirements:
-------
II - 18
1. Fixed cost-variable cost.
2. Rate of return.
3. Discounted cash flow.
These are defined and discussed in Exhibit II-5. While small
metal finishing establishments are unlikely to make sophisticated
financing analyses, small entrepeneurs usually have developed a
pragmatic understanding for evaluating investment alternatives
in their own circumstances. Often owners will also obtain assis-
tance from their bankers, accountant, equipment suppliers, associa-
tion or other outside source.
(b) Financial Techniques
Financing for both productive and nonproductive assets is
difficult in the metal finishing industry. Owners often have to
pledge assets of value equal to or greater than the amount of the
loan. Since most companies are small with low capital investment,
the asset security can be a serious problem if pollution control
equipment costs approach the cost of present unpledged assets.
The following alternative financing methods are those which
must be considered for generating capital:
1. Private funds
2. Bank loans
3. SBA guaranteed loans
4. Public financing
5. Governmental assistance
-------
II - 19
Interviews with industry sources, banks and governmental
agencies provided insight on the criteria used when financing
is required for capital equipment. The following discussion
summarizes the data obtained in interviews.
1. Private Funds represent sources of individual
owners involved in the daily operations of their companies,
resources of nonoperating family owners, and investors entrusting
the operations to a manager or management group. These sources
of financing made the following comments:
(a) One group of establishment operators
is represented by owners who have
been in business for long periods of
time. Strong concern was expressed
about devoting life savings to pollu-
tion control. Unless the payback
period is reasonably short funds
would not be available from this
group.
(b) A second group, consisting of non-
operating family members, indicated
that funds can be provided through
direct loans or by reinvesting
dividends. This group is concerned
with the diminishing return on
investments. Consequently, their
decisions are based on seeking
other more profitable investments
rather than preserving a company
for the purpose of providing an
income for the operating principal,
as is the case of some single pro-
prietor businesses.
(c) Although absentee owners were not
interviewed, one plant manager respon-
sible for an operation believed funds
could be obtained for pollution control
providing that price increases would be
sufficient to pay for increased costs
and profitability would not be reduced.
-------
II - 20
2. Bank Loans represent the most desirable method of
financing, according to the field survey interviews. These inter-
views are summarized in Exhibit II-6. Most of the establishments
indicated that loans will be required to meet the cost of control-
ling pollution. Banks, on the other hand, indicated that specific
conditions will be required before companies could qualify for any
sizable loans. The bank loan environment is based on the follow-
ing factors -.
(a) Little concern was expressed by
banks in general as to the nature
of equipment being purchased.
Most banks indicated that equip-
ment loan decisions are usually
based on the adequacy of cash
flow to meet debt requirements.
(b) No significant variations were
found in the criteria set by banks
in any of the cities where inter-
views were conducted.
(c) None of the banks had prior experi-
ence with pollution control financ-
ing.
(d) Most of the banks believed that some
government assistance would be avail-
able for the metal finishing companies.
All indicated SBA could be a possible
source.
(e) The size of the loan requirements did not
appear to represent a problem provided
the companies could support the debt.
All banks, including branch bank opera-
tions in New York and California indi-
cated they would have no problems meet-
ing requirements in the $25,000 to
$50,000 ranges.
-------
II - 21
(f) Banks required a maximum payback
period of five years for equip-
ment loans. If the establishment
offered real estate as a collateral,
the payback period could be extended
up to ten years.
3. SBA Guaranteed Loan program is a possible source of
financing for those establishments of less than 250 employees,
although a few were not in favor of utilizing this source.
(a) Industry sources indicated that time
delays in consummating the loan ranged
from two weeks to a year. SBA and
bank contacts indicated 30 days as
being typical.
(b) Banks agreed with industry contacts
that SBA guaranteed loans are "last
resort" efforts, entered into only
if conventional bank loans are not
available.
4. Public Financing. Most of the companies in the in-
dustry are either closely held corporations or partnerships. There
are few public corporations. For this reason, the normal method
of outside financing is usually by bank loan. Very little, if
any, financing is obtained by issuance of stock with probably
none by small metal finishers. Cost of public or private place-
ment of equity even if feasible would not make this approach attrac-
tive.
5. Governmental Assistance. Under its Disaster Loan
Program SBA presently finances, on a direct basis, projects
which must comply with federal regulations. An example is where
assistance is provided under the Federal Coal Mine Health and
Safety Act of 1969, where loans are made to mines to correct
deficiencies which have been identified by the Bureau of Mines.
-------
II - 22
A more recent program involves companies required to meet OSHA
standards. If it is determined that a firm is likely to suffer
substantial economic injury without the loan, SBA resources may be
available. Under this program, loan applicants may be considered
under either of the following:
(a) Voluntary Compliance Procedure.
When a small business concern in-
dependently makes changes in order
to comply with Federal Standards.
(b) Cited Violation Procedure. When a
small business concern is required
by the OSHA administration to under-
take action to meet Federal and
State standards.
Under Section 8 of the Water Quality Act such a .program
has been initiated for small concerns required for meet water pollution
standards. However, no money has been allocated for this program.
6. Industrial Revenue Bonds have been used in recent
years to finance pollution abatement equipment. The value of
bonds issued has increased from $85 million in 1971 to an esti-
mated $1 billion in 1972. These bonds generally carry a rate of
670. Due to the high cost of issuing these bonds, the minimum
value of an issue is usually in excess of one-half million dollars.
This minimum is required to meet the high fixed costs of
investment banking and legal services required in the issue at
an anywhere reasonable cost. Presently, only the very largest
of the metal finishing shops would be able to avail themselves
of this type of financing. Thus, revenue bond financing will
not be of assistance to most metal finishing establishments.
-------
ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING
Firm Size
by Number
of Employees
1
5
10
20
50
100
249
4
9
- 19
- 49
- 99
- 249
and Over
FINANCIAL OPERATING DATA, 1973^
Average
Sales (2)
$ 53
146
284
600
j.,263
2,940
6,566
,730
,290
,670
,000
,000
,000
,000
Current
Assets(3)
$ 22,
37,
60,
136,
200,
1,100,
-
000
OOQ
000
000
000
000
Current
Ratio (4)
1.
1.
1.
1.
1.
1.
1.
3
3
3
5
5
/
7
Working
Capital(5)
$ 10,530
28,
55,
62,
131,
337,
754,
700
820
500
600
900
700
Notes: 1. Financial information presented for average sales, current assets and
working capital pertains to the metal finishing industry only. The
current ratio is compiled for SIC 3471 and 3479 categories.
2. Average sales were determined based on the linear relationship of sales
and number of employees shown in Exhibit 1-14
3. Current assets were determined from data collected in plant interviews
and Dun and Bradstreet financial reports.
4. Current ratio, which is the ratio of current assets to current liabilities,
was taken from Robert Morris Associates' Annual Statement Studies, 1973. ><
ffi
5. Working capital, which is defined as the excess of total current assets
less current liabilities, is computed from the Robert Morris Associates'
Annual Statement Studies, 1973 ratio of sales to working capital.
Sources: Dun and Bradstreet Financial Reports, Robert Morris Associates',
Annual Statement Studies, 1973 and Kearney estimates.
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ENVIRONMENTAL PROTECTION AGENCY
STRUCTURE OF A TYPICAL METAL FINISHING SHOP
INCOME STATEMENT BY FIRM SIZE
(Percent)
Establishment Size by Number of Employees
Income and
Expense Category
Net
Less
Gros
Less
Sales
: Production
Expense
s Profit
: Operating
Expense
1-
4
100.0%
60.00
40.00%
26.75
5-
9
100.0%
66.3
33 . 7%
25.0
10-
19
100.0%
68.6
31.4%
26.0
20-
49
100.0%
73.9
26.1%
20.5
50-
99
100.0%
75.3
24 . 7%
18.5
100-
249
100 . 0%
80.7
19 . 3%
15.1
250-
499
100.0%
80.7
19 . 3%
15.1
Net Profit before
Tax
Less: Provision
for Taxes
Net Profit after
Tax
13.25%
4.90
8.35%
8.7%
2.5
6.2%
5.4%
2.4
3.0%
Source: National Association of Manufacturers, 1972.
5.6%
2.7
2.9%
6.2%
2.8
3.4%
4.2%
1.6
2.6%
4.2%
1.6
2.6%
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ENVIRONMENTAL PROTECTION AGENCY
STRUCTURE OF A TYPICAL METAL FINISHING SHOP
INCOME STATEMENT BY FIRM SIZE(l)
Income and __^_^ Establishment Size by Number of Employees
Expense Category^) i-4 5-^ iU-i9~ zu-49~ 5U-9S)iUU-249Z5U-499
Net Sales $53,730 $146,300 $284,700 $600,000 $1,263,000 $2,940,000 $6,566,000
Less: Production
Expense 32,240 97,000 195,300 443.000 .951.000 2.372.600 5.299.000
Gross Profit $21,490 $ 49,300 $ 89,400 $157,000 $ 312,000 $ 567,400 $1,267,000
Less: Operating
Expense 14,370 36,580 74,020 123,000 233,660 443,940 ,991,470
Net Profit before
Tax $ 7,120 $ 12,720 $ 15,380 $ 34,000 $ 78,340 $ 123,460 $ 275,530
Less: Provision
for Taxes 2,630 3,660 6,830 16,200 35,360 47,040 105,060
Net Profit after
Tax $ 4,490 $ 9,060 $ 8,550 $ 17,800 $ 42,980 $ 76,420 $ 170,470
Notes: (1) Financial values pertain to the metal finishing industry only.
(2) Financial information on expenses and profit calculated using
the percentages of Exhibit II-2 and average sales values of
Exhibit II-l.
Sources: National Association of Metal Finishers, 1972.
A. T. Kearney, Inc., 1973.
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ENVIRONMENTAL PROTECTION AGENCY
(1)
STRUCTURE OF A TYPICAL METAL FINISHING SHOP
BALANCE SHEET BY FIRM SIZE
Current Assets
Fixed Assets
Total Assets
1-4
$22,000
28,000
$50.000
5-9
$37,000
43,000
$80.000
10 - 19
$ 60,000
90,000
$150.000
Current Liabilities(3) $22,700 $36,320 $ 68,100
Debt<4) 9,350 14,960 28,050
Owners Investment and
Retained Earnings (5)
Total Liabilities
17,950
28,720
$80,000
53,850
$150,000
20 - 49
$136,000
155,000
$291.000
$ 86,700
62,900
141,400
$291,000
50 - 99
$200,000
360,000
$560.000
$166,880
120,960
272,000
$560,000
100 - 249
$1,100,000
600,000
$1.700.000
$ 530,400
362,100
807,500
$1,700,000
Notes: (1) This financial information pertains to the metal finishing industry only.
(2) The total assets values were computed from financial data in Dun and Bradstreet
Moody's Industrial Manual and Robert Morris Associates Annual Statement Studies.
(3) Current liabilities were calculated using the ratio values of current liabilities
to total liabilities in Robert Morris report.
(4) Debt was calculated from the following equation:
Total Liabilities - Owners Investment = Current Liabilities + Debt.
(5) Owners Investment was calculated using the average liability value and the
percentage of liabilities from Robert Morris Associates Annual Statement Studies.
(6) Total liabilities are calculated from the following equation:
Total Assets = Total Liabilities.
Sources: Exhibit II-l.
Robert Morris Associates Annual Statement Studies, 1973.
Financial Publications.
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EXHIBIT II-5
Page 1 of 3
ENVIRONMENTAL PROTECTION AGENCY
FINANCIAL DECISION CRITERIA
1. Fixed Cost-Variable Cost. One method for ascertain-
ing the ability to remain open and tund pollution control invest-
ments is the fixed cost-variable cost approach. The fixed cost-
variable cost approach considers only the present operating
condition of the firm and ignores future opportunities and re-
wards .
The costs of the firm are considered the sum of fixed
and variable costs of production. The fixed costs are those
which must be paid regardless of whether the firm remains open
or closes. Some examples of such costs are long-term lease
payments, interest payments on debt, and equipment payments.
Variable costs are costs incurred during operation, such as
wages, raw materials, and utilities expense.
According to economic theory, the firm's revenetis should
exceed the variable costs of production, in order for the firm
to remain a viable concern. If revenues are smaller than the
variable costs, then the costs of remaining open are greater
than those of closing and the firm may decide to close. This
decision can be written in the following equation form:
R ^ VC (R = revenue; VC = variable cost)
The operating costs of pollution control equipment
can be considered another increment of variable cost and thus
the firm would require a higher sales revenue to maintain
operations.
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EXHIBIT II-5
Page 2 of 3
FINANCIAL DECISION CRITERIA (Cont.)
This approach does not consider the investment require-
ments of pollution control but rather evaluates the daily operating
condition of a firm.
2. Rate of Return. Another technique for evaluating
an investment is the rate of return. This approach considers the
size of investment required and the return on investment overtime.
Usually a firm will stipulate a minimum rate of return on invest-
ment. This figure depends on the costs of obtaining capital. If
a metal finishing establishment considered pollution control an
investment, then its financing should meet the firm's return cri-
teria. To explain this criteria the following equation shall be
utilized:
_P - PC (1 - L)
S 4 PCI
P = annual profits after tax
PC = annual pollution control costs
S = market value of shop
PCI = pollution control investment
r = required rate of return
t = marginal income tax rate
If the firm's profits less annual pollution costs
is not large enough to make the fraction P " " t^
O "T
greater than the company's rate of return, then the shop owner
may look for another investment.
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EXHIBIT II-5
Page 3 of 3
FINANCIAL DECISION CRITERIA (Cont.)
3. Discounted Cash Flow. The discounted cash flow
approach utilizes the investment size, project life, and cash
flow to determine the feasibility of an investment. Under this
approach, a shop owner will consider the pollution control
investment and the cash flow to be generated over the life of
the investment. Written in equation form, the discounted
cash flow decision is shown below:
T ,
/ °N \
- PCI i 0
r)N
N = 1
CN = cash flow in year N
T = life of investment
r = cost of capital
PCI = pollution control investment
The cash flow, CN, is defined as the annual sales less
the cash expenses for production costs. Cash flows discounted
over the life of the investment (the pollution control equip-
ment) at costs of capital "r" should equal the present investment
value. If present value of cash flow does not equal the invest-
ment, this indicates that cash resources are not sufficient to
cover the pollution control investment. Therefore the firm
will choose not to invest capital in pollution control but
close down.
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ENVIRONMENTAL PROTECTION AGENCY
Type of Bank:
Capital Availability
for Pollution Control
Equipment (PCM)
General Loan
Requirements
Alternatives for
Financing
BANK INTERVIEW SUMMARY
(1)
Medium-Large
Central City
Bank
Currently :
Difficult piece
to Finance; Old
Customers Prefer-
red. Local Banks
are the Usual
Sources for Loans
Future: Bank
Will Maintain
Loan Standards.
Dependent on
Reputation of
Owner. Personal
Guarantees and
Cash Flows. 20%
Equity Financing
Customary.
(2)
Medium-Size
Central City
Bank
No Financing
Problems with
(PCM). Bank's
Funds are "Tight";
Old Customers
Preferred,
Some Equity
Required
Depending on
Reputation of
Owner, Profit-
ability and
Business Net
Worth.
Bank Code
(3)
Large
Central City
Bank
No Financing
Problem with
(PCM). Local
Banks May Be
More Conservative
Lenders.
Reputation of
Principals Import-
ant. Equity,
Needed; Personal
Pledges for
Smaller
Companies.
(4)
Large
Central City
Bank
No Financing
Problem with (PCM).
Forecasts "Tight"
Money to End of
Year; Old Customers
Preferred.
Overall Ability
to Service Debt
Important.
Personal Pledges
Customary.
(5)
Small
Neighborhood
Bank
Loans for (PC!)
Uiuall) Difficult
to Get. Bank's
Customers Average
3:— i/ After- i" i"
Profits; Feu Slight-
ly More Profitable.
Historical Ca^h
Cash Flows and 3-
Year Growth Pro-
jections are Favored
Lien on Real Estate
and Machinery
Considered .
Local Revenue
Bonds, Special
Depreciation
Allowances and
Tax Credits Con-
sidered. "Red
Tape" with SEA
Loans Discourag-
ing.
SBA Loans, Local
Bond Issues and
Equity Financing
from Suppliers.
Local Bond Issues,
Special Pollution
Bonds and SBA
Loans are Sources.
SBA Loans and
Local Bond Issues
Possible Sources.
Future Legislation
Helpful.
Currently:
Secondary Lenders
at Greater Costs,
Future: Improved
SBA Loan Program
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Ill - PRICING ANALYSIS
The market for metal finishing services is very competitive
because services are basically undifferentiated and there are
no strong barriers to entry. In-plant metal finishing is also
an alternative. Therefore, the primary purchasing decision deter-
minants are price, quality, completion schedule, delivery service,
and consistent performance. The following paragraphs describe
the way market prices are determined in the metal finishing
industry.
FACTORS CONSIDERED IN
THE PRICING DECISION
Most metal finishing establishments attempt to price services
on the basis of current market prices. However, there are methods
for determining the production costs of operation which the
establishment owner uses to approximate market conditions. The
three basic pricing methods used are the following.
(a)Labor BasedCosting
Labor based costing is the most frequently used method to
determine the price of services. Because of the high labor content
of metal finishing services, deriving multiples of labor costs for
different categories of metal finishing services is a reasonably
accurate method of judging competition for quotation pricing
purposes.
(b) Equipment Based Pricing
Equipment based pricing is used in automatic plating plants.
In these cases, the equipment cost is a significant portion of the
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Ill - 2
cost expenditures. Since there is a high investment in automatic
equipment, the cost per equipment hour is built into price
estimation in addition to that of the labor used in operation of
this equipment.
(c) Area of Surface Plated
Pricing factors based on the area of surface plated are used
primarily in quoting for plating precious metals such as gold,
silver, platinum. This method prices the metal finished part
based on materials and labor. This is the least used method of
pricing metal finishing services.
CAPACITY AND QUALITY
CONSIDERATIONS
Other important factors which enter into the pricing of
metal finishing services are production capacity and quality.
(a) Capacity
There is a tendency toward lowering of prices if orders are
needed to maintain production lines in full operation. However,
when the establishment is providing services at full capacity,
then additional customers will be quoted a higher price for metal
finishing services according to the Kearney survey. This is due
to a combination of increased costs such as overtime and the
entrepreneur maximizing profits.
(b) Quality
The quality of the metal finishing service is extremely
important in that poor finishing may lead to rejection of the entire
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Ill - 3
product. Since the rejected product is of much greater value than
the finishing cost, small differences in finishing prices are
tolerated by the customer for consistent levels of high quality.
Interviews with metal finishing customers indicated that quality
and price considerations are equally important but quality at a
slightly higher price may be acceptable. Therefore, a firm with
good quality control will be able to obtain a small price premium,
because this is attractive to quality conscious customers.
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IV - IMPACT FRAMEWORK
INTRODUCTION
The purpose of this section is to review the economic frame-
work established for impact assessment. This framework is based
on the characteristics of the metal finishing industry, insti-
tutional considerations of the U.S. economy, and financial and
economic analytical models.
APPROACH TO
ASSESSMENT
Impact assessment attempts to define the range of economic
adjustments which will occur as a result of the change in pollu-
tion abatement control being investigated. These adjustments
will take place immediately and over a longer period of time.
Changes will take place at the market and industry level and
may impact individual or classes of plants and firms very dif-
ferently. In addition, macro-effects on the national or regional
economy or on specific areas such as foreign trade may result.
Impact assessments must analytically estimate the results and
new trends caused by the effluent limitation guidelines.
Kearney's basic approach to estimating impacts is to ex-
amine market relationships first and estimate the relationships
which will result. Secondly, plant and firm impacts are re-
viewed based on estimated market conditions. Then iterative
adjustments are made so that market and industry impacts are
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IV - 2
consistent with the individual impacts on firms and plants. '
ASSUMPTIONS
The framework established for impact assessment is based
on several key assumptions:
1. The cost and technical data base provided by
Battelle Columbus Laboratories are assumed to reflect the true
conditions which will result from the effluent limitation guide-
lines .
2. The effluent guideline limitations are assumed to
be enforced effectively in 1977 and 1983 and followed by the
industry. Metal finishers are assumed to act and plan the con-
duct of their business on this basis at the time the regulation
is effective in 1975.
3. The lead time provided the industry to meet the
required standards in 1977 and 1983 is assumed to be adequate
to purchase and install the required equipment at the costs
estimated. This assumes that potential tight supply conditions
in water treatment systems and applications engineering will
not create abnormally long lead times or significantly increase
real prices of equipment.
(1) For example, an initial market price increase estimated
on the basis of pollution control costs will not be con-
sistent with individual firm impacts if due to financing
difficulties a large percentage of plants close reducing
industry capacity to a point that the industry is unable
to supply the services demanded at that price. In this
instance, an iterative adjustment of market price and
closure analysis is required to development of an impact
assessment consistent with real economic conditions.
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IV - 3
The effect of changes in these key assumptions on the im-
pact assessments is discussed in Section VII - Limits of The
Analysis.
DYNAMICS
(a) Adjustment
Horizon
The metal finishing establishment owner and the customer
industries know at the time of promulgation what changes will be
mandated by the regulation at some point in the future--three
years or nine years away. There is still some uncertainty as
to the result that might be expected. The requirement for ad-
justment is neither unexpected nor the result of a gradual long-
term trend. It is definite and scheduled. The adjustment re-
sponse will reflect these dynamic characteristics.
(b) Adjustment Versus
Baseline
The baseline forecasts developed in Section VI are esti-
mates of-industry conditions in 1977 and 1983 without effluent
guidelines. The promulgation of the Effluent Guidelines and
publication of associated cost and impact studies will imme-
diately begin to cause change in the development of the industry.
This results since these studies provide information on future
industry conditions, and entrepreneurs will adjust their plans
(2)
based on this new information.v '
(2) For example, if it becomes known in the industry that small
shops are subject to relatively higher costs for pollution
control, new entrants will not enter the industry in this
size of establishment during the period between promulgation
(or even before) and the date the guideline is effective.
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IV - 4
This dynamic effect of planning adjustment gives rise to
two important distinctions in measuring economic impact. Mea-
surement of impact against the baseline can become a theoretical
impact calculation not an estimate real world impact. This oc-
curs because the adjustment of plans always serves to ameliorate
the real world impact over what it would have been without this
planning reaction. Thus real world economic impact often cannot
be estimated against the baseline. An example of this for the
closure of small shops under different baseline conditions is
indicated in Exhibit IV-1. Measurement of actual real world im-.
pact properly attributable to adoption of effluent guidelines
requires careful consideration of present and forecasted base-
line conditions for the industry studied.
IMPACT
FRAMEWORK
(a) Market
Conditions
Market changes in 1977 and 1983 are measured against the
baseline forecast conditions estimated in Section VI. A com-
petitive market framework is utilized. The market pricing model
is described below:
1. Market prices will rise to cover the average
annual costs of pollution abatement including depreciation,
operating and maintenance costs, and return-on-investment (cost
of capital) for plants remaining in the industry.
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IV - 5
2. Cost differences according to establishment size
and process will occur. Market prices will be determined by
the costs incurred by the low cost size categories representing
807o or more of industry capacity. In competitive markets, these
plants can expand to meet full market demand if required. For
the metal finishing industry due to the diseconomies of small
scale, pollution abatement prices will be determined by estab-
(3}
lishments with more than 20 employees.
3. Differences in cost between size categories will
create economies of size which reinforce trends to larger es-
tablishments. These are longer run trends and will not signifi-
cantly affect pricing estimates for the impact period.
4. Changes in industry volume are estimated based on
the initial market price increase estimated and estimates of
price elasticity.
5. Impacts on different segments of the industry by
size and process are then checked to see if they are consistent
with meeting market demand and supply conditions at the estimated
price level. If not, iterative adjustments are made to market
(4)
pricing estimates.
(3) Some establishments may be isolated from strong market com-
petition due to product specialization or geographic loca-
tion. Some of these plants will be able to obtain a price
premium over those competitive market conditions if their
(4) For example, an initial market price increase estimated
on the basis of pollution control costs will not be con-
sistent with individual firm impacts if due to financing
difficulties a large percentage of plants close reducing
industry capacity to a point that the industry is unable
to supply the services demanded at that price. In this
instance, an iterative adjustment of market price and
closure analysis is required to development of an impact
assessment consistent with real economic conditions.
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IV - 6
After iterations, the above model is used to estimate basic
demand and supply conditions after impact. Together with firm
and establishment impact considerations, estimates of the new
industry structure are developed. Also the establishment of
longer run trend effects are estimated.
(b) Operational
Impacts
Metal finishing plants will make capital investments and
change process flows to accommodate to the effluent treatment
systems required to meet the regulation. Factors affecting im-
pacts include:
1. Types of equipment, application engineering, and
dollars of investment required.
?.. Supplies, operating costs, and maintenance ex-
penditures required.
3. Space and rearrangement of processes required.
4. Effect on employment.
Impact assessment•includes an identification and description
of these operational impact characteristics.
(c) Customers and
Suppliers
Impacts on customers and suppliers are analyzed in terms of
the adjustments required to industry operations and the changed
market conditions for metal finishing services. These impacts
are transferred to supplying and buying markets. Kearney's
approach is to identify and describe the nature of the impacts
transferred and review the potential for significant secondary
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IV - 7
impacts in these markets. Impacts with potential for causing
major adjustments are analyzed further to delineate the effects
which result.
(d) Capital Investment
and Financing
Financing of pollution control equipment creates potential
adverse impacts on the industry. Investment requirements may
be large in relation to normal capital expenditure levels. Thus,
normal channels of financing may not be adequate since cash flow
and/or credit characteristics of the industry may not be favor-
able.
Kearney's approach to assessing financing impacts is to
critically review the economic and financial characteristics of
the industry in relation to the institutional characteristics
of financing institutions. In this manner impacts can be iden-
tified and quantified.
(e) Micro
Impacts
Individual impacts reflect the set of adjustments which im-
pact a firm or set of firms. In effect, these establishments
are differentially impacted according to size, primary process,
degree of diversification, and type (direct or municipal) of
discharge. This impact will vary from the average impact re-
flected by market supply and demand conditions because of these
factors.
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IV - 8
The primary cause for differential adjustments due to pol-
lution control is the development of significantly higher treat-
ment costs for a set of firms in given circumstances in relation
to the average treatment costs being incurred which are reflected
in the market demand and supply conditions.
Individual impacts are assessed in terms of:
1. Economies of Size in Pollution Abatement. Treat-
ment system technology is such that costs cannot be reduced below
a minimum point even though the flow does not utilize the full
capacity of the system. Also low flow volumes tend to be more
costly to treat per unit than higher flow volumes. Thus the
costs of small firms are higher and they may be impacted more
seriously than other sizes of firms. Also there are potential
large scale economies which might differentially benefit the
largest firms.
2. Economies of Process Specialization. Treatment
of wastes from different processes may be significantly differ-
ent. This can create economies of metal finishing process
specialization which will result in firms changing the mix of
services they offer.
3. Economies of Size in Financing. Institutionally,
there are economies of size in financing, which occur in terms
of both cost and availability of funds. Thus financing require-
ments may differentially impact by size of firm.
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IV -
(f) Closure
Model
Severely impacted individual firms may close under the pres-
sure generated by the economic adjustments required. Kearney's
closure model is described below.
1. Model income statements by size of firm are used
to estimate profits and interest before taxes for firms by size
group. Firms in size groups with an average ratio of earnings
before interest and taxes to long-term debt and less than ten
are candidates for closure. Ten percent is considered a mini-
mum long-term return on capital for more than doubling the in-
vestment in an industry.
2. Establishments are segmented into two groups for
closure analysis:
(a) An above average profit group
with geographic and/or product
specializations which partially
isolate the firms from market
competition. This group is
estimated to consist of 107o of
the total firms. A limit of a
10% price premium over the
market price is estimated.(6)
(b) The average and below average
profit group which typically
represents firms with direct
competition from other metal
finishing establishments in
their markets.
(5) This is consistent with governmental estimates of the long-
term cost of capital. See OMB Circular A-94.
(6) Estimated by A. T. Kearney, Inc. based on information de-
veloped on the functioning of the metal finishing service
market.
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IV - 10
3. The above average profit group with some isolation
from direct market competition is considered to have a 10% price
premium. The income statement model is used to estimate results
and reassess candidates for closure based on profitability and
financibility with this price premium.
4. The candidates for closure are analyzed to see if
they could finance the required investment based on projected
cash flow. Amortization over five years at 1070 interest is
utilized in this analysis.
5. Establishments in size classes which are unable to
earn 10% on long-term debt plus equity before interest and taxes
and/or are unable to generate sufficient cash flow to retire
their debts based on the costs of meeting the 1977 effluent
guidelines are estimated to close in 1977.
6. Establishments unable to meet similar requirements
in 1983 are estimated to act on this fact in 1977. This
"spillover" effect on-closure decisions will cause firms to
either close in 1977, to plan to grow to a viable size direct
discharger in 1983, or to switch to a municipal discharge loca-
tion in 1977, or to plan to close in 1983 if they are able to
make an adequate return and recover capital during the 1977-1983
period. Thus establishments may close in 1977 or 1983, based
on the 1983 effluent limitation guidelines.
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IV - 11
(g) Other
Impacts
Impacts transmitted to other portions of the economy are
also considered. These include adjustments caused in:
1. Foreign trade.
2. Local or regional economies.
IMPACT
ASSESSMENT
Impact assessment using the framework established in this
section is developed in Section VI. Section IV-A describes the
baseline against which impact measures are made. Section IV-B
develops the market price effects. Section IV-C reviews the
impacts in terms of industry volume, operational impacts,
customers and suppliers, capital investment and financing,
micro impacts, closure analysis, other impacts and total annual
costs.
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EXHIBIT IV-1
Examples of Measures of Future Impact
Analytical
Alternative
Case I
Case 2
Impact Condition:
Small Establishments
Close
Impact Measure:
Present Number
of Establishments
Impact Measure:
Baseline Number of
Establishments
Baseline forecast
indicates growth
in number of small
establishments.
Growth does not oc-
cur because plans
are changed in re-
sponse to regula-
tions . This mea-
sure estimates
actual closures.
Because growth does
not actually occur
in this case, this
measure over-
estimates real
closures. The dif-
ference between the
higher baseline es-
timate and the
present number of
shops represents
a foregone oppor-
tunity for the ex-
pansion of small
business, but not
real world clo-
sures .
Baseline forecast
indicates decline
in number of small
establishments.
The decline is at-
tributable to es-
tablished economic
trends without ef-
fluent guidelines.
Thus the present
number of shops
would over-estimate
impact. The rate of
decline is like]y to
be accelerated due
to the effluent
guideline adoption.
The real closure
impact is best esti-
mated by the base-
line estimate since
it isolates the
closures due to the
impact of the ef-
fluent guidelines
from closures which
occur as a result of
already established
economic trends.
However, the base-
line forecast will
over-estimate the
number of closures
in the first year
of enforcement.
Closures will accel-
erate in response to
the effluent guide-
lines adoption, thus
the baseline number
of shops will close
over the entire per-
iod of time before
enforcement due to
the regulation.
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V - TECHNICAL AND COST DATA BASE
A - METAL FINISHING PROCESSES
AND PRESENT INDUSTRY TREATMENT TECHNOLOGY
The discussion in this section reviews the technical aspects
of metal finishing processes. Before assessing the impact of
water pollution control on the industry, it is important to
understand how water use relates to specific metal finishing
processes. Then it is possible to evaluate what alternatives
may exist for the industry to minimize the total impact of
water pollution control. It is also necessary to understand
what level of present technology exists in the industry for
treating process effluents. Any baseline treatment technology
in place in the industry establishments will reduce the total
cost impact upon the industry.
The process technology will be discussed under the follow-
ing subject headings:
Metal Finishing Processes
Typical Process Flows
Sources of Water Pollution
Present Treatment Technology
Economic Considerations in Selection
of Treatment Methods
METAL FINISHING
PROCESSES
Metal-finishing can be broadly defined as a process which
imparts some change to the surface characteristics of a base
material. On this basis, metal-finishing includes abrading,
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V - 2
cleaning, polishing, coating, plating, etching, painting, and
numerous other surface treatments. Primarily, the changes are
designed to improve such characteristics as conductivity,
corrosion resistance, durability and decorative appeal as dis-
cussed in Section I-C
Over 100 different processes are known to exist to provide
the aesthetic and technical characteristics required by product
manufacturers purchasing metal-finishing services. Among the
more commonly known metal-finishing processes are:
- Electroplating
- Anodizing
- Pickling
- Etching
- Chromating
- Phosphatizing
- Painting
- Polishing
- Buffing
- Shot blasting
Some of these are simple physical surface characteristic
changes. Others consist of either deposits of one metal onto
another or the chemical conversion of the base metal so that a
different surface is formed on the base metal itself. Metal
finishing establishments can be engaged in single or multiple
processes including both common and other lesser known pro-
cesses .
In 1968, the Ohio Association of Metal Finishers conducted a
survey of its membership to determine the types and numbers of
metal finishing processes performed by member establishments.
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V - 3
Eighteen companies participated in the study which involved
over 65 different metal-finishing processes and variations thereof.
The results of the study are in Exhibit IV-1. This exhibit
indicates the number of participating establishments performing
each of 65 different metal finishing processes and variations.
The results support two assumptions about industry processes.
1. Cadmium electroplating, chromating, pickling and
acid dipping are important processes and are performed in approxi-
mately 25% to 4070 of the establishments.
2. E-lectroless plating on plastics is a secondary
operation done in only a few metal finishing establishments. Only
3% of the establishments reported having this process.
Data from Exhibit IV-1 have been reconstructed by grouping
several similar metal-finishing processes into families of pro-
cesses. Eight families were developed including the following:
1. Nonchemical Coatings
Painting, paint stripping, spraying and lacquering.
2. Chemical Surface Preparation
Bright dipping, acid dipping, degreasing, etching, metal
stripping, oiling and pickling.
3. Aluminum Finishing
Anodizing, alodizing, ' alumiliting.
(1) This process is not covered in the
the metal finishing study.
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- 4
4. Conversion Coatings and Special Surface Finishing
Bonderizing, phosphating, rust proofing, oxidizing,
and parkerizing.
5. Electroplating
Brass, bronze, cadmium and lead plating, and electro-
less plating.
6. Mechanical Finishing (2)
Debarring, grinding, grit blasting, polishing, and
buffing, shot blasting, sand blasting, scratching and tumbling.
7. Process Metal Plating
Silver, gold, indium, and rhodium plating.
8. Chromium Treating
Chromating, dichromating, and chromic acid anodizing.
The 18 companies were cross-referenced to the eight process
families to determine the degree of process diversity each plant
has. The results are in Exhibit IV-2 and summarized in Table
IV-1 on the following page.
(2) This process is not specifically covered
in the metal finishing study.
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V - 5
Table V-l
Summary of Selected Metal Finishing
Processes in Surveyed Plants
Plant
Number
1
3
7
11
14
15
18
20
21
22
23
24
26
27
30
33
37
38
Cleaning and
Acid Treating
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Aluminum
Finishing
X
X
X
X
X
X
X
Electroplating
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Chromium
Treating
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Number of
Families
2
1
3
-
4
3
3
2
4
4
4
1
4
3
3
3
3
3
Totals 14 7 16 15_
Source: Exhibit V-2
From the table note the following:
1. Approximately 39 percent of the establishments
perform aluminum finishing.
2. Cleaning and acid treating were reported as
separate processes in 79 percent of the establishments.
3. Approximately 90 percent or more of the establish-
ments perform electroplating and/or chromium processes.
4. The average plant is involved in nearly 3 of the
selected family process groups. If all the processes shown in
Exhibit IV-1 were counted individually, the average establish-
ment would have 32 different processes.
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V - 6
The amount of process diversity in metal finishing estab-
lishments may complicate the problem of effluent treatment.
However, all different processes in Exhibit IV-1 and summarized
in the table do not require complex waste water handling methods
Some do not require any treatment of the effluents; many process
waste waters can be treated separately. The discussion of each
process will define the type of waste stream which is generated by
the process. The eight families of processes have been narrowed
to four classes of metal finishing processes which will be
discussed under the following subject headings:
- Mechanical Surface Preparation and
Finishing Processes
- Chemical Surface Preparation and
Finishing Processes
- Electroplating Processes
- Conversion Coatings and Special
Surface Finishing
(a) Mechanical Surface Preparation
and Finishing- Processes
This group of metal-finishing processes is more often used
for pre-treatment purposes in conjunction with other metal
finishing work rather than as a single purpose process, although
some establishments do exist solely for these purposes. Common
types of mechanical finishing are as follows:
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V - 7
- Polishing and Buffing
- Grinding or Machining(^)
- Sandblasting or Abrasive Blasting^3)
- Shot or Grit Blasting(3)
- Liquid Blasting(3)
This group of processes take place in either compressed
air or water systems whereby centrifugal force is applied
with an abrasive; e.g., shot, sand, grit, or similar materials.
Liquid blasting is the only mechanical finishing process
with a potential for creating water pollution. However, since
the metallic and abrasive contaminants are easily removed through
simple screening procedures, this class of finishing does not
constitute a significant and costly waste water pollution problem.
(b) Chemical Surface
Preparation and Finishing
Processes
Chemical surface preparation processes include both physical
and chemical methods of degreasing, cleaning or treating the
surface of metallic products. This is typically done through
immersion, tumbling, spraying or other means where the part is
directly exposed to the liquid or vapor cleaner.
(3) This process is not specifically covered in
the metal finishing report.
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V - 8
The cleaning agents used for these processes are typically
solvent degreasers followed by alkaline or acid solutions.
Individual processes are discussed below.
1. Solvent degreasing occurs by exposing the metal
to a vapor of the solvent solution. These solvents are normally
reclaimed after becoming sufficiently contaminated by the soluble
oils removed in the process. Many metal-finishing establishments
use this method. It is a nonwater based cleaning operation.
2. Alkaline cleaning removes soils through a deter-
gent action where the foreign matter is displaced from the
base metal product. The process is performed in a medium of
alkaline salts such as sodium hydroxide (caustic soda), sodium
metasilicate, sodium orthosilicate, trisodium phosphate, sodium
carbonate (soda ash), tetra sodium pyrophosphate, sodium tetrabo-
rate (borax), sodium polyphosphate or combinations of these and
other alkaline salts.
The solutions may be maintained at ambient or
elevated temperatures and applied through soaking methods,
pressure spraying or electrolytic techniques. The application
method selected depends upon the product the degree of cleaning
required and the metal finishing processes which are to be
subsequently performed.
Alkaline cleaning is perhaps the most commonly used
method of cleaning metal products which are to be electroplated.
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V - 9
painted or given other final surface treatments. Rinsing
following this cleaning operation is extremely important and
is used to remove all traces of the alkaline salts to prevent
contamination of the next solution. If cleaning only is performed
rinsing is required to halt further chemical or surface action
created by the alkaline solution on the metal.
3. Acid pickling and finishing are processes which
are performed by dipping the metal into solution of acid, acids
and other compounds and water. The acid baths are generally
maintained at temperatures ranging from ambient to 180 degrees
Fahrenheit. Acid pickling must be followed by water rinses to
retard further chemical action or to avoid contamination of
electroplating baths or other solution used in subsequent pro-
cesses.
These cleaning and pretreatment baths are common to
all metal-finishing plants. Contaminants in the effluents
generally consist of dissolved phosphates, other materials in
solution, waste acids and alkalis and salts formed by the
reaction of the acids and metals cleaned.
Both the acid and alkaline solutions can be mixed and
treatment typically consists of pH adjustment and removal of
any solid materials left in the effluent. Solvent degreasing
does not pose a water pollution problem.
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(c) Electroplating
Processes
Electroplating consists of depositing a metal plate onto a
base material usually consisting of another metal. The process
is performed in a solution containing salts of the metal being
plated. The plating bath is electrically charged by introducing
a low voltage current through electrodes and letting the plated
part serve as the anode.
Electroplating typically occurs in still tanks where parts are
individually wired to a rack and immersed into the bath.^ ' Other
methods include barrel plating where a rotating barrel is immersed
into the solution. Racks, barrels or baskets of parts may be
lowered manually or automatically into the plating solutions.
Individual products which are electroplated often have
specific technical requirements in terms of plating sequence,
duration in the baths, temperature of solutions and amount of
current required. However, most plating processes require the
following series of events:
1. Precleaning
2. Alkaline Cleaning
3. Acid Dipping
4. Electroplating
5. Other Finishing Treatments
(4) Another method of plating infrequently used consists
of placing parts loose in a basket and immersing the
basket in the bath.
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V - 11
Solutions used for cleaning and dipping were discussed
in paragraph (a) of this section. Solutions used in electro-
plating are similar to the cleaning solution only in terms of
pH (acid/alkaline characteristics). Only a few plating wastes
may be treated through simple techniques. Most solutions
contain pollutants which must be treated separately and there-
fore cannot be mixed with other plant effluents. These latter
types fall into two basic categories (a) cyanide plating solutions
and (b) chromium containing solutions.
Cyanide solutions are usually alkaline in nature while chro-
mium solutions are acid. Solutions which do not contain cyanide
or chromium can be mixed with effluents from other metal finishing
processes and treated in common. Cyanide and chromium streams
must be treated separately before combining with other waste streams
Exhibit V-3 lists 19 commonly used plating solutions
and shows each by the characteristic which dictates the type
of treatment required.
Cyanide containing solutions are the most prevalent and
are specified by the industry because its technical efficiency
exceeds other lesser polluting types.
Major types of electroplating processes and types of
solutions included in this study are discussed in the following
paragraphs.
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V - 12
1. Precious metal plating processes include silver,
gold, platinum, rhodium and indium. The general process used
to electroplate precious metals is identical to other types of
plating. Where precious metals are plated, plants typically
utilize good housekeeping practices and water conservation
techniques to minimize losses of plating solutions in rinse waters.
Metal-finishing establishments typically use the first rinse as a
replacement solution for the plating bath. Solutions which have
concentrations of metals which cannot be used as replacement solu-
tions are refined to reclaim the gold, silver, or other precious
metals. Secondary and tertiary rinses where concentration of
metals are relatively low and cannot justify refinement, con-
stitute the main source of pollution.
2. Cadmium Plating baths are mostly cyanide solution.
Plating processes may be in still tanks where parts are immersed
in the bath with limited agitation or in barrels which are rotated
in the plating solution. Some cadmium plated parts are chromated
after plating to enhance appearance, preserve the cadmium plate,
or prepare the part for painting. This is usually done as a final
process and is performed in acidic solutions containing hexa-
valent chromium compounds, plus other inorganic or organic com-
pounds known as activators or catalysts. Since the cyanide plat-
ing solutions and chromating solutions are not compatible, ex-
tensive rinsing is required between each process step. The
introduction of chromating increased the pollution control
problem for the plating since an additional pollutant is added
to the waste stream.
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V - 13
3. Other Metal and Metal Alloy Plating includes iron,
tin and tin alloys, lead, bronze and lesser known metals. The
plating processes used for these metals are identical to those
described for cadmium and precious metals.
(d) Conversion Coating
and Special Surface
Finishing
This class of metal-finishing includes a number of opera-
tions whereby the base metal of the product is either electro-
chemically converted or merely chemically converted to form a
protective coating on the base metallic surface. The following
paragraphs describe commonly known processes in this group.
1. Anodizing. Anodizing is a process performed on
aluminum base products in which the surface metal is electro-
chemically converted to aluminum oxide. The process typically
is performed in a chromic or sulfuric acid electrolytic cell,
although other acids are also used, with the part acting as the
anode. Anodizing is remotely similar to electroplating in
that it is an electrochemical process, and is often performed
in a plating establishment. Process steps include precleaning,
etching} anodizing and sometimes chromating. Rinsing occurs as
a necessary part of the total operation to remove previous
solutions between process steps.
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V - 14
Waste waters from sulfuric acid anodizing constitutes less
of a pollution problem than chromic acid anodizing since the
sulfuric acids only require neutralization of the waste stream.
However, if the aluminum product is anodized in chromic acid
solutions, or chromated, dichromated or hard surface anodized
the chromium must be reduced from hexavalent to trivalent prior
to pH neutralization.
2. Phosphate Coating is the treatment of iron or
steel with a dilute solution of phosphoric acid and other
chemicals whereby the surface of the metal, reacting with the
acid, is converted to an integral, protective layer of crystal-
line phosphate. The method of applying phosphate is usually
determined by the size and shape of the article. Small items
such as bolts, nuts and small fabricated parts may be phosphated
/
in tumbling barrels. Large articles which are difficult to
immerse are frequently sprayed. The former group of small parts,
lend themselves, because of size and capability of being tumbled,
to being processed in metal finishing plants.
The sequence of process steps in phosphating establish-
ments is essentially the same as electroplating and anodizing.
Products are cleaned, rinsed, treated and rinsed after the
finishing takes place.
Phosphate rinse solutions are classified in the acid/
alkaline group and can be co-treated with cleaning and pickling
solutions.
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3. Chromate Conversion coatings are performed in a
manner similar to phosphate coatings, or immersion plating.
The process typically follows a plating or anodizing operation
and is performed in a chromic acid solution. 'The chemical re-
action results in disolution of some surface metal, and forma-
tion of a protective film containing chromium compounds.
The chromate conversion process, requires process rinses
to be treated for chromium wastes in addition to acid, and removal
of metals.
4. Electropolishing is a process of finishing a metal
surface anodically in a concentrated acid or alkaline solution.
The process is the opposite of electroplating, in that metal is
removed rather than deposited. The result is a micro-smoothing
effect on the metal surface which is greater than that accomplish-
ed by polishing. Waste water from rinses contain trace acids and
dissolved metallic ions.
5. Electropainting is a relatively new metal finishing
process when compared to more conventional finishing techniques.
Some products in a few industries, as described in Section I-C,
which were formerly painted by immersion or spray processes are
being electropainted. This is particularly true of large and com-
plex shaped parts.
Electropainting is performed in a series of steps.
These typically include metal preparation (cleaning and phosphat-
ing), drying (when necessary), electropainting, and water rinsing.
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V - 16
The operations are essentially the same as electroplating since
a current is passed through the part which acts as the anode. The
charged paint solids are attracted to the article and are de-
posited in a manner similar to a plated metal.
6. Etching like electrochemical polishing occurs in a
chemical bath, usually acid. Metal is removed rather than de-
posited in a highly controlled manner. This process differs
from other metal removal processes in that large quantities of
metal are removed rather than just a surface layer. Consequently,
solutions used in the process contain significant quantities of
dissolved metal. In metal finishing establishments using this
process, if the amount and value of the etched metal is signifi-
cantly high, recovery systems may be employed to save the metals
rather than discharge effluents.
The six conversion coating and special surface finishing
processes discussed all require acid or alkaline waste treatment
plus removal of solids. The special- processes including chromic
acid anodizing and all chromating processes would require an
additional and separate treatment for the chromium wastes.
TYPICAL PROCESS
FLOW
Process flows in most metal-finishing plants follow a series
of routine steps as shown on Exhibit V-4. Each of the processes
described in the previous paragraphs require specific process
steps. However, most include precleaning following by finishing.
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V - 17
Depending on the final finishing to be attained, the material
is subjected to one or several intermediate treatments and sub-
sequent rinsings.
SOURCES OF
WATER POLLUTION
Water pollution in metal finishing plants comes from seven
major sources:
1. Drag-in solutions.
2 Drag-out solutions.
3. Accidential spills and leaks.
4. Intentional dumpings.
5. Losses due to equipment cleaning.
6. Cooling water.
7. Wash water from ventilation system.
The paragraphs below briefly describe each of these sources
of water pollution.
1. Drag-in Solutions. Drag-in is basically a pre-
vious cleaning or treatment solution which is carried over
into a subsequent tank containing another solution. It is
necessary to minimize drag-in because process solutions are
generally incompatible. The first solution introduced into
the second could render the latter ineffective and require
frequent solution replacement. In order to maintain good
working solutions, rinse baths are placed between these opera-
tions. Obviously, these rinse baths would become too contaminated
to be effective unless they are replaced at regular intervals..
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V - 18
Instead of total replacement continuous water streams are used
to keep concentrations within acceptable ranges. The overflow
from these rinse baths, contaminated with plating solutions, is
one source of pollution.
2. Drag-out Solutions. Drag-out is the residual
solution which adheres, because of surface tension or the design
of products, to the products being finished. Normally this
residual solution consists of final processing or plating materials
which must be removed to avoid poor quality workmanship due to
spotting or streaking. The most economical method of removing
these solutions is rinsing in clean water. Rinse waters must
be replaced frequently to keep concentrations low. In most
finishing plants fresh water flows continuously rather than in
batches into the rinse tanks.
3. Accidental Spills and Leaks. Tank leakages and
accidental spills occur in many plants but can be controlled
by exercising care and improving housekeeping efforts. This
source of plant waste water contains a variety of materials and
would present difficulties in treatment by normal technology if
permitted to merge and be collected in a common waste stream.
However, since few plants presently treat their wastes, spillages
are generally diluted with other effluents and discharged in
dilute form.
4. Intentional Dumpings. When processing tanks be-
come contaminated or if the solution is spent and cannot be
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V - 19
used any more it is intentionally dumped. Dumping is not
frequent because baths are usually concentrated with plating or
finishing materials and represent significant investments in
materials. Thus, economic considerations limit the amount of
dumping. In municipalities where control of effluent quality
is enforced, concentrated solutions are mixed with highly dilute
wastes or water in order to comply with local effluent standards.
5. Losses due to Equipment Cleaning. Some processing
equipment such as filters and holding tanks are periodically
cleaned to remove accumulated filtered materials and sludge.
These contaminants are washed away in dilute form during the
cleaning operation. Plants which treat their wastes have no
particular problem with these solutions. They are merely mixed
with materials to be treated. Other plants depend on the volume
of water used in cleaning to dilute the concentrated effluents.
6. Cooling Water. Cooling water in heat exchangers
can become contaminated through leaks. For water conservation
purposes this water is routed to the rinse tanks after the
heat exchanger.
7. Wash Water From Ventilation System^ Water used to
wash ventilation exhaust air is contaminated and is added to
the rinse water for treatment.
Sources of pollution in a typical plant are numerous, yet
some can be controlled and others can be eliminated with little
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V - 20
cost impact. However, the major portion of discharged wastes
require costly processes to meet either local standards or
proposed or existing Federal Standards.
It appears that as long as cost of water remains low in re-
lation to treatment methods, and municipalities accept effluents
with low concentrations, dilution may continue to occur from many
establishments especially the small establishments with low visi-
bility (from regulatory agencies).
PRESENT EFFLUENT
TREATMENT TECHNOLOGY
Treatment methods commonly used in metal finishing plants
range from well known and proven technology to fairly new and
sophisticated systems. These are:
1. Dilution.
2. Chemical destruction.
3. Evaporative recovery.
4. Ion exchange.
5. Reverse osmosis.
Most plants do not treat waste waters at all, and depend
upon other wastes already in municipal systems to provide the
dilution factor. Typically these are small plants where visi-
bility is not high, and volumes of discharge are not great.
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Dilution is predominantly used by plants which are required
to maintain low concentrations. When dilution is not sufficient
to meet local regulations, chemical destruction is used on a
selective basis, and then only the highly toxic wastes are treated.
Cyanide baths and chromium generally fall into this classification.
Newer technologies, including evaporative recovery, ion
exchange and reverse osmosis are in developmental stages and were
not installed in any small or medium size metal finishing opera-
tions surveyed during this study. Some large metal finishing
establishments and in-process operations contacted by Kearney
in other SIC code classifications indicated these newer tech-
nologies are being tried with disappointing results. Because
local regulations in a few municipalities have required some
polluters to begin treating effluents, these establishments have
installed new treatment equipment and methods; however, the majority
of the industry has done practically nothing and is waiting for
evidence that control equipment can perform to meet local
and proposed federal regulations.
On the basis of the industry survey and other sources of
information on the status of in-place treatment technology, it
is estimated that most establishments in the industry are not
consistently meeting proposed standards and it is assumed that
application of existing technology is at near zero levels.
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V - 22
ECONOMIC CONSIDERATIONS
IN TREATMENT METHOD
SELECTION
Because water has traditionally been the least costly of
all resources used in metal finishing, little attention has been
given to the amount of water used to clean and rinse the product
Many of local regulations are based on concentration Levels
so most industry plants will reduce concentration of effluents
by the dilution method.
Unless water costs rise significantly, most plants will not
install treatment equipment until required to do so because of the
cost difference between water purchase and pollution control
equipment. In some cases, holding tanks are installed along
with monitoring devices to provide balanced levels of concentra-
tion in the effluent discharged. In making cost comparisons,
even the investment in tanks is more economically favorable than
simultaneously reducing water volume and using chemical treatment
methods. However, the effluent guidelines will not permit a plant
to be in compliance by using dilution.
OTHER
CONSIDERATIONS
Solid waste removal has not been a problem of much importance
since plants have not been required to precipitate and clarify
effluents. Proposed standards discussed in Section V-B require
reduction of solids in effluents which is expected to have a cost
impact for establishments which are presently performing a mini-
mum amount of treatment without removal of solids and heavy metal
precipitates.
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V - 23
B- PROPOSED EFFLUENT GUIDELINES AND COSTS
Proposed effluent limitation guidelines and associated costs
have been developed for the metal finishing industry by Battelle
Columbus Laboratories. The results of their studies are documented
in:
10 "Development Document For Effluent Limitations
Guidelines And Standards of Performance - Metal Finishing Industry,
June 4, 1974.
2. "Development Document For Effluent Limitations
Guidelines And Standards of Performance - Cost of Waste Treatment
Systems", May 21, 1974.
The guidelines developed by Battelle Columbus Laboratories,
in the proposal stage apply to existing and new source direct
dischargers. Pretreatment guidelines will also be proposed for
municipal dischargers. Two alternate pretreatment standards
have been assumed for impact analysis.
The proposed effluent limitations for the Metal Finishing
Industry cover three levels of treatment.
- Best Practicable Technology Currently Available
Best Available Technology Economically Achievable
New Source Performance Standards
These levels and assumptions for pre-treatment standards are
discussed in the paragraphs below. The remainder of this section
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V - 24
discusses the costs associated with these levels of treatment
and their application to the establishment population by segment,,
(a) Best Practicable
Technology Currently
Available
Level I (Best Practicable Technology Currently Available)
effluent limitations will be referred to as BPT in the balance of
this report. By July, 1977 all existing metal finishing plants
discharging to navigable waters will be expected to reduce the
quantity of pollution discharged in their process waters to meet
BPT guidelines. The Battelle Columbus Laboratories description of
BPT guidelines is presented in Appendix D - Proposed Effluent
Guidelines. A brief overview of key limitations is discussed
below.
Two primary categories of the proposed standard apply
to the establishments under study:
1. Subcategory 1 - This applies to electroplating
cadmium and precious metals, electroless plating on metals,
immersion plating, anodizing, phosphating, chromating, electro-
painting, chemical milling, and etching. The recommended water
usage rate for this group is 80 liters per square meter finished
for existing sources and 40 liters per square meter for new
sources with a pH range of 6 to 9.
2. Subcategory 2 - This applies to electroless plating
on plastics, electrochemical machining with acid electrolytes
and electropolishing. The recommended process water usage rate
for this group is 160 liters per square meter finished with a
pH range of 6 to 9.
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V - 25
V-2 below, summarizes the applicable BPT
guidelines:
Table V-2
Phosphate
Summary
Guidelines
of Proposed BPT Effluent
by Applicable Subcategory
Effluent Limitations
(mg/m2/0p)
Subcategory 1 Subcategory 2
ed Solids
'4>
(CN2)
anide (CN)
CR+6)
.1
(TSS) 3,200
160
80
8
2,400
160
80
8
80
80
160
80
80
8
160
80
6,400
320
160
16
4,800
320
160
16
160
160
320
160
160
16
320
160
Fluoride (F~)
Aluminum (A1)
Cadmium (Cd)
Chromium+6 (
Chromium Total
Copper (Cu)
Iron (Fe)
Lead (Pb)
Nickel (Ni)
Silver (Ag)
Tin (Sn)
Zinc (Zn)
Note: (1) Milligram per square meter per operation
Source: Battelle Columbus Laboratories
(5) Standards are a multiple of flow lines concentration.
There is no specific flow limitation. If an establish-
ment has a flow rate beyond that recommended, it can
still be in compliance by getting the concentration
down.
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V - 26
Subcategory 1 limitations represent wastes typically
found in all metal finishing establishments from cleaning,
pickling, plating, etching, anodizing, phosphating, chromating
and other finishing operations except those in other subcategories
Note the following:
1. Cyanide, hexavalent chromium and silver pollutants
are restricted to 8 milligrams per liter per operation in sub-
category 1, and are doubled in subcategory 2 to 16 milligrams per
liter per operation.
2. All metallic pollutants considered to be toxic have
restrictions of 80 and 160 milligrams per liter for subcategories
1 and 2, respectively. The nontoxic metals, aluminum and tin
are only limited to 160 and 320 milligrams per liter in sub-
category 1 and 2, respectively. The rationale for subcategory 2
limitations being twice that of subcategory 1 is covered in detail
in Appendix D. However, Battelle estimates that establishments
with electroless plating processes, included in subcategory 2,
may not be able to reduce the pollutants to levels in sub-
category 1 because of complexing agents in the electroless plating
baths. Therefore, if co-precipitation occurs with electroless
plating wastes subcategory 2 restrictions apply, otherwise in
segregated waste streams, subcategory 1 will apply.
Subcategory 3 values in Table 1 of Appendix D are exactly
the same as subcategory 1.
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V - 27
Nonaqueous plating processes, (subcategory 4 in Table 1 of
Appendix D) do not have wastewater problems for some processes
and effluent limitations were not developed by Battelle for
processes in this subcategory. Also, there are no separate
establishments which perform these processes solely. Where they
do occur, they are secondary processes in metal finishing plants
with other primary processes.
The reduction of pollutional characteristics to meet BPT
limitations is to be accomplished with chemical treatment of
wastewater prior to discharge. Present technology recommended
by Battelle is estimated to be capable of achieving the destruction
of oxidizable cyanides, reduction of hexavalent chromium,
neutralization of acid and alkali wastes, and removal of all but
small amounts of heavy metal pollutants.
(b) Best Available Technology
Economically Achievable -
Level II
Level II effluent limitations, which will be referred to as
BAT, will require no discharge of process wastewater pollutants
to navigable waters by July 1, 1983. It is estimated by Battelle
that this level of performance can be achieved through existing
technology, technology under development, and that expected to
be developed before 1983. It has been suggested that metal
finishing establishments reduce water usage by employing
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V - 28
existing and well known methods; e.g., simple housekeeping
and counter current rinsing. By accomplishing this, treatment
problems will be minimized since water volumes would be less.
Appendix D describes BAT methods expected to be used by 1983 to
achieve no discharge of pollutant to navigable waters. These
include reverse osmosis, electrodialysis, and use of special
ion-exchange systems. Some of these technologies are undergoing
development, while still new techniques are expected by Battelle
to emerge by 1983.
(c) New Source
Performance
Standards
New sources are defined as metal finishing establishments
constructed after proposal of regulations. Battelle Columbus
Laboratories proposed effluent limitations for new sources are
described in Appendix D. A brief overview of the limitations is
discussed below.
Two primary categories of the proposed standard apply to
new sources:
1. Subcategory 1. This applies to new sources, as
previously defined, electroplating common metals and precious
metals, electroless plating on metals, immersion plating,
anodizing, phosphatirtg, chromating, electropainting, chemical
-------
V - 29
milling, and etching. The recommended process water usage
rate for this group is 80 liters per square meter processed
for existing sources and 40 liters per square meter for new
sources, with a pH range of 6-9.
2. Subcategory 2. This applies to electroless plating
on plastics, electrochemical machining with acid electrolytes
and electropolishing, with a process water usage rate of 160
liters per square meter.
3. Subcategory 3. This applies to electropainting and
the process water usage rate is the same as Subcategory 1.
Table IV-3 on the following page shows the limitations for
applicable subcategories for establishments in this study.
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V - 30
Table V-3
Summary of Proposed New Sources
Effluent Guidelines by Applicable Subcategory
Effluent Limitations
(mg/m2/op) (1)
Description
Total Dissolved Solids (TD)
Phosphate (P04>
Total Cyanide (CN2)
Oxidizable Cyanide (CN)
Fluoride (F~)
Aluminum (Al)
Cadmium (Cd)
Chromium+6 (CR+6)
Chromium Total
Copper (Cu)
Iron (Fe)
Lead (Pb)
Nickel (Ni)
Silver (Ag)
Tin (Sn)
Zinc (Zn)
Subcategory 1
1,600
80
40
4
1,200
80
40
4
40
40
80
40
40
4
80
40
Subcategory 2
3,200
160
80
8
2,400
160
80
8
80
80
160
80
80
8
160
80
Note: (1) Milligram per square meter per operation
Source: Battelle Columbus Laboratories
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V - 31
New sources are required to achieve exactly one-half the
values for each pollutional characteristic required for existing
sources (Table IV-2). The rationale given by Battelle is new
sources will have opportunities to design and install in-process
systems which can be operated with lower volumes of water than
can be economically achieved by existing plants.
New source standards for pretreatment for municipal systems
are to be similar to those required of direct dischargers.
MODEL PLANTS
PRODUCTION PROCESSES
EPA, through its effluent guidelines contractor, has pro-
vided the capital equipment costs and variable operating costs
for meeting BAT and BPT effluent limitations. Costs have been
scaled to model plants based on size of employment. The average
employment sizes are 5, 10, 20 and greater than 20 employees
(47 employees). Four process types were developed for each
plant size. These processes are discussed below.
1. Plant A includes metal finishing processes in which
no cyanides or chromium compounds are used. This plant configu-
ration would require precipitation of heavy metals, neutralizing
and clarification of waste waters prior to discharge.
2. Plant B includes metal finishing processes in which
cyanides are present along with other cleaning, dipping and plat-
ing baths. This plant would require oxidation of cyanides in
addition to precipitation, neutralization and clarification of
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V - 32
wastewaters prior to discharge.
3. Plant C includes metal finishing processes in
which chromium is present along with non-cyanide wastes. Treat-
ment for these processes would require chromium reduction,
acid and alkaline rinse neutralization, heavy metal precipita-
tion and clarification of wastewaters prior to discharge.
^' Plant D includes metal finishing processes in-
volving cyanides and chromium wastes. These processes would
require cyanide oxidation, chromium reduction, neutralization
of acid and alkali rinses, heavy metal precipitation and
clarification of wastewaters prior to discharge.
Each process type described above is related to a different
pollution control cost level. Pollution control costs progressively
increase from Process Type A to Process Type D.
Process segments are made up of plants with varying degrees
of diversification depending on the types of metal finishing
operations performed. On this basis there is a range of process
plant types for each process segment. A lower and upper bound
for this range can be established for each process segment depending
on the minimum diversification associated with the primary
operation and maximum diversification associated with the secondary
operations. Table IV-4 on the following page presents the lower
and upper bounds of process plant types for each process segment.
These applications treatment technology are based on Kearney's
estimate of actual industry conditions not on the theoretically
possible diversification.
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V - 33
Table V-4
Lower and Upper Bounds of Process Plant
Type for Each Process Segment
Process Plant Type
Process Segment Lower BoundUpper Bound
Cadmium Plating B D
Precious Metal Plating B B
Anodizing A C
Pickling A A
Phosphatizing A C
Etching A A
Source: Battelle Columbus Laboratories
Water Usage
Rates
Wastewater treatment costs are directly related to the
amount of water which must be treated. To minimize costs of
capital equipment and operating treatment systems, the volumes
of water used also must be minimized. The effluent guidelines
recommend a use rate of 80 liters of water per square meter
processed in a finishing operation for existing sources and 40
liters per square meter processed for new sources.
A process has been defined as the specific metal finishing
step excluding any initial alkaline cleaning and/or acid dipping.
Thus, a single plating operation would be one process while
plating and chromating would constitute two processes. Anodizing
alone would be one process, but anodizing and chromating would
be two processes.
-------
V - 34
The size of a metal finishing shop and the type of metal
finishing operations performed determine the total water require-
ments, and consequently the costs. The model plants used in this
section have production rates and water requirements as shown in
the following table.
Table V-5
Model Plant Production and Water Use Rates
Rinse Water
Employment Production Rate Process Rate Flow
Size M2/Hour M2/Hour Liters/Hour
5 65 75 - 100 6,000- 8,000
10 120 170 - 230 13,600-18,400
20 200 290 - 390 23,200-30,400
Over 20 (47) 495 685 - 815 54,800-65,200
Source: Battelle Columbus Laboratories.
The production rates indicate that a five-man plant can
metal finish approximately 13 square meters per employee and
would use about 1,200 to 1,600 liters of water per employee.
Larger plants in the over 20 group process about 11 square meters
per employee and use somewhat less water, approximately 1,200 to
1,400 liters per employee. This production diseconomy for the
larger plant is due to the necessity for additional full time
employees in functions as maintenance, supervision, precleaning
and other metal finishing support activities which are not
required in the smaller plants.
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V - 35
CAPITAL EQUIPMENT
AND ANNUAL OPERATING
COSTS
Battelle Columbus Laboratories capital equipment and
operating costs for BPT were developed for the previously
identified model plants. BAT costs for 1983 were developed by
Battelle Columbus Laboratories for a representative average
size plant of 38 employees having processes similar to
Type D plants. New source capital and operating costs
have not been provided by Battelle Columbus Laboratories in
sufficient detail to indicate a differential impact on new sources
Counterflow rinse tanks, which cost an additional $20,000 capital
investment, will be recommended. However, this addition will
reduce the water volume requiring treatment. Thus capital and
operating costs of treatment equipment must be scaled down
accordingly. Without additional information, it is estimated
that the total costs to new sources approximates that of
BPT technology.
The capital equipment and annual operating costs for BPT
were differentiated for municipal dischargers and direct dis-
chargers. The cost difference between direct and municipal
dischargers is due to higher installation costs caused by space
constraints and higher land costs for the municipal discharger.
The overall difference in total costs between the two type of
dischargers is approximately 1% or less.
-------
V - 36
Because this difference is insignificant, further discussion
of BPT will pertain only to the Battelle estimates for direct
dischargers.
An alternative set of costs is associated with only the
municipal metal finishing establishments. Costs have been
calculated to exclude clarification technology for municipal
dischargers whose unclarified effluents may be treated with other
municipal wastes in the municipal treatment plant. The discussion
in this section will make the following distinction between
BPT costs.
1. Alternate A assumes all industry establishments
must treat to BPT requirements. Both direct and municipal dis-
chargers will have full BPT costs including clarification.
2. Alternate B will differentiate between direct dis-
chargers and municipal dischargers. Direct dischargers will have
costs for BPT technology as in Alternate A. However, municipal
dischargers will have costs for chemical treatment only; clari-
fication technology costs will be eliminated.
The discussion on costs will be covered under the following
subject headings:
- BPT Capital Equipment Costs - Alternate A
- BPT Annual Operating Costs - Alternate A
- BPT Capital Equipment Costs - Alternate B
- BPT Annual Operating Costs - Alternate B
- BAT Capital Equipment Costs
- BAT Annual Operating Costs
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V - 37
(a) BPT Capital
Equipment Costs -
Alternate A
Battelle's estimated investment for BPT capital equipment
under Alternate A ranges from approximately $18,000 for a minimum
employee size plant (less than 5 persons) to nearly $400,000 for
a 47 man plant with completely diversified process types.
The Battelle Columbus Laboratory estimates of capital
equipment cost for BPT are shown in Exhibit V-5. These costs
have been summarized in the following table.
Table V-6
Summary of BPT Capital Costs -
Alternate A - By Type of
Process and Employment Size - 1974
Size of Capital Costs for Process Types
Employment
5
10
20
20 + (47)
Source: Exhibit V-5.
Note that costs have been estimated for four process types
as defined by Battelle Columbus Laboratories. The waste water
treatment technology for the processes are shown on the following
page.
Note: (6) This refers to the model plant data developed only.
To estimate costs of larger plants the costs for the
47 employee model plant were scaled higher on the
basis of employment.
A
$35,305
51,905
68,780
321,820
B
$46,340
63,600
83,760
336,765
C
$53,735
75,825
91,360
350,160
D
$65,355
86,235
107,505
363,040
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V - 38
(a) Group A plants treat acids and alkaline
solutions and clarify the effluents.
(b) Group B plants treat cyanide in addition
to acids and alkaline solutions and
clarify the effluents.
(c) Group C plants treat chromium wastes,
acid and alkaline solutions and
clarify the effluents.
(d) Group D plants treat cyanide, chromium,
acid, and alkaline wastes and clarify
the effluents.
2. Costs increase progressively for each process as
the plant sizes increases up to the 20 .plus employee model plant.
3. The 20 plus (47 employees) plant investment costs
are more than 3 to 5 time the investment cost for the 20 man
plant although the number of employees and the production output
is less than 3 times the 20 man plant. The reason for this dis-
economy of scale is inherent in the model developed by Battelle.
(b) BPT Annual
Operating Costs -
Alternate A
Annual operating costs prepared by Battelle Columbus
Laboratories include estimates for the following:
1. Cost of capital.
2. Depreciation.
3. Chemical use.
4. Labor
5. Maintenance
6. Electric power.
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V - 39
7. Water and sewer charges.
8. Sludge remova1.
9. Ion exchange.
10. Evaporator treatment costs and savings. '
All cost estimates made by Battelle are related only to the
four plant sizes and the processes described in previous para-
graphs. These model plant costs are based on specific process
flows and equipment. The detailed costs can be reviewed in the
Battelle Columbus Laboratories report titled "Development Document
for Effluent Limitations, Guidelines and Standards of Performance,
and Cost of Waste Treatment System" dated May 21, 1974.
(7) Evaporator treatment is included in the treatment
system for all plants with 20 or more employees.
This reflects its inclusion by Battelle Columbus
Laboratories in their over 20 employee (47 employee
.actual) model plant. For the 20 to 49 employee size
group, the savings generated do not justify the
$146,000 investment cost. Elimination of the evaporator
would require utilizing a larger scale treatment system
than that developed in the model plant because of the
increased water volume generated for treatment. Thus,
a new model plant estimate would be required for adjust-
ing capital and operating costs if the evaporator is
eliminated.
Kearney conducted the closure analysis using estimated
costs for a model plant without evaporator. These
costs were approximated by subtracting the $146,000
from capital investment and adjusting annualized costs.
The annual operating costs were increased according
to savings estimated by Battelle Columbus Laboratories
of $2,392/year.
-------
V - 40
A change has been made in the Battelle model plant cost
estimates for this report. Cost of capital used by Battelle was
8% of the total investment rather than on the average investment
in pollution control equipment. This calculates to 1670 on the
average investment over its economic life. This is somewhat
optimistic and is not believed to represent what is typically
experienced by metal finishing industry establishments in Kearney's
analysis of the industry. In similar respects, alternate uses of
capital, which would be placed in pollution control equipment,
would offer only limited opportunities for this level of return.
Consequently, the annual costs of capital for pollution control
estimated by Battelle have been adjusted to reflect what is
considered in most industry segments as a reasonable target. This
had been determined to be 10% on the average amount of the
investment.^1 ' Battelle cost estimates have therefore been
revised to reflect this change.
(8) The total cost of capital is based on an average invest-
ment for this analysis. This implies that the amount of
services provided by the treatment system is invariant over
time with appropriate maintenance expenditure. In this
model the services are generated at the same rate throughout
the economic life of the investment. Thus, the depreciation
over the life of the system will generate the required
replacement investment capital needed to perpetuate the
system. In this instance, average investment is equal to
one-half the original investment over the life of the equip-
ment. This model was selected because it reflects the
conditions expected for treatment systems in this industry.
An alternate model would use a declining rate of service over
the equipment life even though appropriate maintenance
expenditures are applied. This model would require continuous
annual investment of new capital to maintain a constant flow
of service from the treatment system. In this instance
depreciation on the original system is not sufficient to
maintain it at its original capacity. New annual investment
is required and only after the original equipment life is
complete will the rate of annual depreciation be such that
depreciation over the life of the equipment pay for replace-
ment with constant prices. In this instance average invest-
ment equals the original investment if the rate of service
flow decline is directly proportional to depreciation.
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V - 41
Exhibit V-6 shows estimates for cost of capital (revised
to reflect 10% on average investment), depreciation and other
annual operating costs for BPT treatment - Alternate A. The
relevant data are summarized in the following table:
Table V-7
Summary of BPT Annual Costs - Alternate A
by Type and Size of Establishments - 1974
Establishment Size Annual Costs by Process Types
(Number of Employees) A
5
10
20
20 +
$13,102
26,594
44,247
110,491
B
$17,674
36,875
56,840
124,841
C
$20,936
37,358
54,443
119,038
D
$23,705
45,265
67,010
145,372
Source: Exhibit V-6-
Note the following:
1. The operating costs for the plants do not include
Battelle's estimate for chemical analysis which could amount to
$12,500 per year, according to Appendix A of Cost of Waste
Treatment Systems, May 21, 1974. This expenditure seems
inappropriate and was not incorporated in model plant costs.
Battelle rationalizes that if trace analysis becomes required to
a large extent in the industry, independent analytical lab-
oratories set up for mass analysis should be able to do a more
reliable job and at a cost that is considerably less than what
individual establishments would incur.
-------
V - 42
2. Costs for the 20 employee and 20 plus employee
model plants decrease as they go from process B to C. In all
other cases the costs increase in steps as the sizes change and
as the processes proceed from A through D. This is unexplained
in the Battelle cost document but appears to be caused by the
mix of metal finishing processes in the different models.
3. Cost estimates were not developed for model plants
with employment exceeding 47 persons. Battelle indicated that a
linear relationship existed between operating costs for the four
process types and numbers of employees. This linear relationship
is used to estimate costs for establishments with more than 47
(g\
employees. '
(c) BPT - Alternate B
Investment Costs for
Municipal Dischargers
Pretreatment costs for municipal dischargers could be lower
than those indicated under subsection (a) and (b) on the preceding
pages, if municipal dischargers are not required to clarify
waste waters. Should Alternate B become the guideline for this
portion of the industry, their costs would be reduced substantially,
Under this assumption, municipal dischargers could have
lower capital equipment cost requirements than the direct
discharger establishments. This would result in the following
differences in capital costs between municipal dischargers
and direct dischargers.
(9) The linear relationship is a direct scaling of larger plants
based on employment in relation to the 47 employee model plant
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V - 43
Table V-8
Summary of Reduced Capital Costs
for Clarification Technology
for Municipal Dischargers
1974
Clarification Technology Capital
Size of Costs by Type of Process
Model Plant A BCD
5 $12,550 $12,550 $14,900 $14,900
10 19,100 19,000 22,400 22,400
20 25,400 25,400 25,000 28,000
20 + (47) 47,100 47,100 49,600 50,600
Source: Exhibit V-5
The savings in capital costs in the preceding table
represent substantial capital cost advantages for the smallest
and least complex process municipal discharger model plants over
the same size direct dischargers. The differences are not quite
as large for the model plants in the 20 plus group but they
are significant.
(d) BPT Annual Costs -
Alternate B
Annual costs for BPT - Alternate B are based on the same
cost components used to develop Alternate A annual costs minus
the costs associated with operating clarification equipment.
This reduction for Alternate B results in BPT annual costs
being 570 to 1370 lower than the Alternate A annual costs for all
size and types of model plants.
-------
V - 44
The annual costs for BPT - Alternate B are shown in the
following table:
Table V-9
Summary of Annual Cost for Model
Plants - BPT - Alternate B - 1974
Annual Costs by Type of Process
Size of Plant A BCD
5 $11,254 $15,838 $18,765 $21,456
10 24,328 34,133 34,143 42,062
20 40,457 52,710 50,420 63,003
20 + (47) 103,737 118,088 112,017 138,212
Source: Exhibit V-7
Note the following:
1. The annual costs in the table increase in the
same manner as BPT direct discharger costs. As the size increases,
costs also increase, and as the process types change from A
through D costs also tend to increase progressively.
2. The incremental cost of an A process compared to
a D process plant is approximately 50% for the small (5 employees
plant) and about 337o for the 20 plus employment plant. Marginal
costs for process changes are discussed in the impact analysis.
(e) BAT Capital
Equipment Costs
BAT technology only applies to direct dischargers. Consequently,
there are no alternates required for analysis. The standards
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V - 45
require dischargers to eliminate all discharges of process effluents
to navigable waters. Battelle estimates this will be accomplished
with evaporative recovery and reverse osmosis units installed at
the end of the chemical treatment equipment.
Assuming 1977 technology is already in place, Battelle esti-
mates that the additional investment for 1983 will almost equal
that required for 1977.
Battelle's estimates were based upon modeling a representative
plant of 38 employees performing a variety of metal finishing oera-
tions. The waste treatment technology included three types for
which costs were estimated. The types of plants and capital costs
associated with each are shown in the following table:
Table V-10
Model Plant Costs for BAT Technology
Type of Plant Cost for Capital Equipment
Combined Chemical Treatment $215,100
Segregated Chemical Treatment 358,670
Combined Waste Treatment with Reverse Os-
mosis for Zero liquid discharge 453,700
Source: Battelle Columbus Laboratories
Note that the increased investment in equipment for the
BPT combined chemical treatment plant is approximately one-
half the cost of the same plant with reverse osmosis and
evaporator units.
-------
V - 46
(f) BAT Annual
Costs
Annual operating costs for the model plant equipped for BAT
treatment are also in the magnitude of twice the BPT operating
costs. The increases are for additional maintenance, labor,
chemicals and power costs, in addition to added capital and
depreciation for the BAT equipment. The reverse osmosis unit
returns much of the process waters to the metal finishing baths,
therefore, a savings in water cost results. However, operating
costs for the units far exceed the savings in materials.
The operating costs differences between BPT and BAT
technology for the 38 employees model plant are shown in
Table V-ll below;
Table V-ll
Annual Operating Cost (1974) Comparison
BPT and BAT Model Plant
Total
Operating Cost
Percent
Increases
Depreciation
Cost of Capital
Labor
Maintenance, Power
and Sewer
Chemicals
Sludge and Dry Salt
Disposal
Reverse Osmosis and
Evaporator
Reverse Osmosis Water
Savings
Totals
Source: Battelle Columbus Laboratories, 1974
BPT
$ 21,500
17,200
28,000
9,570
26,300
6,460
$109,030
BAT
$ 45,370
36,300
32,000
16,900
29,820
6,070
41,140
(4,960)
$202,730
(Decreases)
+$23,870
+ 19,100
+ 4,000
+ 7,420
+ 3,520
(390)
+ 41,140
(4,960)
+$93,700
(Decreases)
+1117o
+111
+ 14
+ 78
+ 13
(6)
_ _ —
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V - 47
Note the following:
1. BAT operating costs are 85.9% higher than BPT costs
for the same plant.
2. Reverse osmosis and evaporator net operating costs
including water savings, are 1870 of the total operating cost of
the model BAT plant. These operating costs represent nearly 40%
of the increase for the model plant.
3. Reverse osmosis operating cost represents $15,700
of the $41,140 and the evaporator unit represents $25,440.
4. In the supporting cost document, Battelle recognizes
that it may not be economically practical to install the evaporator
unit in many plants. They also indicate that improvements are
needed in reverse osmosis technology before it can be applied
to all the processes in the model plant.
METHODOLOGY FOR
APPLYING MODEL COPTS
TO INDUSTRY SEGMENTS
Cost estimates described in previous paragraphs have to be
applied to the industry segments developed and described in
Section I-C of this report. The following paragraphs describe
the procedure used to make these applications.
(a) Application of Model
Process Type of
I n du s try S e gme n t s
Each metal finishing process was described in detail
in Section IV-A to establish a basis for identifying the types
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V - 48
of technology which would be required to treat the waste
streams created in specific metal finishing operations. Based
on that discussion and the types of treatment technology which
are in the model plants, the six industry process segments from
Section I-C relate to the model plant treatment types as follows
Table V-12
Model Plant Process Segments
Industry Process Model Plant
Segment Process
Cadmium B or
Precious Metal B
Anodizing A or
Pickling A
Phosphatizing A or
Etching A
Notes: (1) For chromating after plating.
(2) For chromic acid anodizers.
Source: A. T. Kearney.
Note that only A or B process types occur for the industry
establishments unless secondary operations are performed in the
establishments. Some of the cadmium platers and many anodizers
also chromate after the primary metal finishing process These
establishments would generate additional pollutants and would be
classified in a higher cost process group. This problem is handled
in the impact section by using upper/lower bound cost estimates.
-------
V - 49
(b) Relating Model Plant
Employment to Industry
Segments
Battelle Columbus Laboratories developed costs for four
process and size segments. The Census of Manufactures was used
for developing industry employment segments. The model plants
and their costs have been applied to industry segments as shown
in the following table:
Table V-13
Relationship of Model Plant Size
and Industry Establishment Segments
Model Plants
Industry Establishment
Segments(2)
Employees
Notes
Employees
5
10
20
20 + (47)
(3)
(3)
(3)
(1) As designed by Battelle Columbus Laboratories.
(2) As designed by the Census of Manufactures.
(3) Sizes not developed.
Range
1- 4
5- 9
10-19
20-49
50-99
100-249
250 or more
Average
2
7
14
30
67
140
350
Source: Battelle Columbus Laboratories. Census of Manufactures,
1967; and Kearney estimates.
Note the following:
1. The table assumes that the industry establishments
are comparable to the model plant in the opposite columns.
2. Plants over 47 employees were not modeled.
3. The average size number of employees in the industry
segment are less than the model plant employment.
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V - 50
(c) Estimating Costs
for Industry
Establishments
The Battelle cost data for the four model plants were used
to determine operating costs for industry establishments. The
capital costs for the model plants were applied directly to the
plants in that size segment as shown in Table V-13. Capital
costs for plants with over 50 employees were scaled higher on a
direct relationship to employment.
Variable costs were adjusted on a direct pro rata basis from
those indicated in the model plants to reflect the employment
levels for each size category as shown in Table V-13.
These data are shown in Exhibits V-5 to V-10.
The total BAT cost estimate for the representative plant
modeled by Battelle was approximately 1.85 times the cost for a
BPT equipped plant. Battelle estimated that this could apply for
BAT requirements for all industry establishments. On this basis,
a multiplier of .859 was applied to BPT capital and annual costs
to estimate incremental BAT costs over the 1977 BPT costs in-
curred.
ANNUAL COST OF
POLLUTION FOR
INDUSTRY
SEGMENTS
Annual costs of pollution abatement to industry establishments
are based on the models and adjustments as described. Those costs
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V - 51
which will be utilised in the analysis in Section VI - Economic
Impact, are summarized in the following paragraphs. Note that
these costs have been adjusted to 1973 price levels in order to
be consistent with the other data available for impact assessment
(a) BPT - Alternate A
Annual Costs
Costs for the industry segments are based on process
segments and establishment size. Under Alternate A, costs for
all establishments will be as shown in the following table:
Table V-14
Summary of Alternate A Annual Costs - 1977
(1973 Price Levels)
Industry Process Segments
Industry
(Number
1
5
10
20
50
100
250
Size Segments
of Employees)
4
9
- 19
- 49
- 99
- 249
or Over
Anodize-rs ,
Picklers,
Etchers ,
Phosphatizers
$ 10,235
23,132
39,122
94,353
149,780
311,890
778,300
Cadmium and
Precious
Metal
Platers
$ 12,930
30,600
48,120
103,830
168,740
351,700
877,800
Anodizers
with
Chromating
$ 14,800
31,400
46,850
101,000
162,100
336,500
841,800
Cadmium
with
Chromating
$ 16,840
37,130
55,880
117,610
197,180
411,400
1,026,700
Source: Exhibits V-8, V-9, V-10, V-ll
Note the following:
1. All costs are in 1973 dollars.
2. The annual costs include costs of capital at 10%
of average investment in pollution equipment, depreciation at
straight line basis for ten years, and labor and other variable
costs adjusted to each plant size and process segment.
-------
V - 52
3. Plants with over 20 employees have costs associated
with evaporators which were estimated to reduce overall water
volume and thus the size of equipment required for treatment.
Table V-15 summarizes the capital investment required to
meet BPT effluent guidelines in 1977:
Table V-15
Model Plant Size
(Employees)
1-4
5-9
10 - 19
20 - 49(O
50 - 99
100 - 249
250 & over
Note: (1) With evaporator
Source: Exhibits V-8, V-9, V-10, V-ll
(b) BPT - Alternate B
Industry Segment
Annual Costs
BPT
Capital
Costs - 1977
(1973 Price Levels)
Process Group Segment
$
2
A
33,460
49,200
65,200
305,085
436,080
910,080
,275,200
B
$ 43,930
60,350
79,400
319,250
455,040
948,000
2,370,000
C
$ 50,946
71,877
86,609
331,952
474,000
985,920
2,474,280
D
$ 61,961
81,756
101,910
344,162
492,960
1,023,840
2,559,600
Costs for Alternate B are based on Alternate A costs less
costs to operate clarifiers. The summary of the costs for this
alternative is shown in the table on the following page.
-------
V - 53
Table V-16
Summary of Alternate B (Pretreatment)
Annual Costs - 1977
(1973 Price Levels)
Industry Process
Industry Size Segments
(Number of Employees)
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 or Over
Anodizers ,
Picklers ,
Etchers,
Phosphatizers
$ 8,503
20,984
35,624
87,950
140,413
292,000
730,000
Cadmium and
Precious
Metal
Platers
$ 11,190
27,900
44,200
97,430
160,200
333,700
831,400
Segments
Anodizers
with
Chroma ting
$ 11,460
28,360
43,000
94,360
152,600
316,600
792,500
Cadmium
with
Chromating
$ 14,790
34,100
52,100
110,820
187,700
391,500
976,440
Source: Exhibits V-12, V-13, V-14, V-15
The adjustments made to Alternate A costs for 1973 dollars
also apply to Alternate B costs. Depreciation, cost of capital
and variable costs were all calculated on the same basis. The
important consideration in the table is that Alternate B costs
are 1370 to 20% lower than Alternate A costs in the 1-4 employee
establishments. This difference decreases as the establishment
size increases to a 5% to 6% variation in the 250 or more segment
Table IV-17 on the following page, summarizes the capital
investment costs for Alternate B pretreatment standards in 1977.
-------
V - 54
Table V-17
Pretreatment Capital Costs - 1977
(1973 Price Levels)
Model Plant Size Process Group Segment
(Employees)
1 - 4
5 - 9
10 - 19
20 - 49(!)
50 - 99
100 - 249
250 & over
A
$ 21,785
31,720
41,883
262,084
373,607
777,360
1,952,880
B
$ 32,327
42,224
56,463
276,532
398,160
824,760
2,057,160
C
$ 28,687
51,562
61,184
287,576
407,640
853,200
2,142,480
D
$ 48,329
61,506
76,588
298,913
426,600
891,120
2,227,800
Notes: (1) With evaporator
Source: Exhibits V-12, V-13, V-14 and V-15
(c) BAT Annual Costs
for Industry Segments
The annual costs of operating 1983 zero discharge equipment
will be approximately 85.9% higher than the annual cost for 1977
The table below summarizes the additional annual costs required
for 1983 technology.
Table V-18
Summary BAT Annual Incremental
Costs Over BPT
(1973 Price Levels)
Industry Size Segmcn'ts
(Number of Employees)-
Anodizers ,
Picklers,
Etchers ,
Phosphatizers
Cadmium and
Precious
Metal
Platers
Anodizers
with
Chroma ting
Cadmium
with
Chroma ting
1
5
10
20
50
100
4
9
19
49
99
249
250 or Over
$ 8,809
19,870
33,606
81,049
128,661
267,914
668,560
$ 11,107
26,285
41,335
89,190
144,948
302,110
754,030
$ 12,713
26,973
40,244
86,759
139,244
289,054
723,106
$ 14,466
31,895
48,001
101,027
169,378
558,393
881,935
Source: Table V-14 costs multiplied by .859.
-------
V - 55
Note the following:
1. The above table reflects incremental costs only.
2. It is assumed that existing plants in 1983 will
already have in place 1977 technology.
3. The difference between direct dischargers costs
for BAT and municipal dischargers requiring only BPT technology
in 1983 will be even more substantial than that noted in the
previous paragraph. This will be discussed in the impact analysis
section.
Table V-19, below, summarizes the incremental capital
investment required to meet BAT effluent guidelines in 1983.
Table V-19
Incremental BAT Capital Costs - 1983' '
(1973 Price Levels)
Mtfdel Plant Size Process Group Segment
(Employees)
1
5
10
20
50
100
250
4
9
- 19
- 49(2)
- 99
- 249
& over
A
$ 28,742
42,262
56,007
262,068
374,593
781,759
1,954,397
B
$ 37,736
51,840
68,205
274,234
390,879
814,332
2,035,830
C
$ 43,763
61,742
74,397
285,147
407,166
846,905
2,125,407
D
$ 53,225
70,228
87,541
295,635
423,453
879,479
2,198,696
Notes: (1) BAT capital costs for 1983 are calculated
by multiplying the BPT capital costs for
1977 by .859.
(2) With evaporator.
Source: Table V-15
-------
Process Performed
Aluminum, Plating on
Acid Dipping
Alodizing
Alumiliting
Alroking
Anodizing:
Chromic Acid
Colored
Hard Coat
Sulfuric Acid
Antique Finishes
Baking
Black Nickel
Black Zinc
Blackening:
Oxide
Chemical
Bonderizing
Bright Dipping :
On Aluminum
Other
Brass Plating:
Still
Barrel
Bronze Plating
Burnishing
Cadmium Plating:
Still
Barrel
Automatic
Semi-Automatic
Chrornate Treatment:
Dichromate
Clear
Chromium Plating:
Bright:
Still
Barrel
Automatic
SOURCE: Ohio Association of Metal Finishers
ENVIRONMENTAL PROTECTION AGENCY
ECONOMIC ANALYSIS OF
PROPOSED EFFLUENT
GUIDELINES
THE METAL FINISHING INDUSTRY
Number of
Companies
5
7
3
4
2
_
7
6
1
6
4
10
2
8
_
5
5
4
-
10
5
4
4
-
7
-
14
12
2
1
-
14
14
-
14
13
2
4
Percent of
Companies
137.
18
8
11
5
18
16
3
16
11
26
5
21
13
13
11
26
13
11
11
18
37
32
5
3
37
37
37
34
5
11
TYPICAL METAL
Process Performed
FINISHING OPERATIONS
Number of
Companies
Percent of
Companies
Chromium Plating: (Cont.)
Hard:
Industrial
Crack Free
Copper Plating:
Still
Barrel
Automatic
Deburring
Degreasing
Dichromating
Drawing
Etching:
Aluminum
Steel
Galvanizing (Elec.)
Gcfld Plating
Grinding
Grit Blasting
Immunizing
Indium Plating
Iriditing
Identification Plate
Lacquering
Lead Plating:
Still
Barrel
Lubriting "Parco"
Metal Stripping
Nickel Plating:
Bright:
Still
Barrel
Automatic
Gray
Industrial
Electroless
Sulfamate
Duplex
Dup-Ni
_
8
1
-
14
8
4
11
13
3
1
-
4
1
4
2
7
3
3
2
8
2
8
-
2
-
2
8
-
14
12
8
6
5
3
3
1
6
2
21%
3
37
21
11
29
34
8
3
11
3
11
5
18
8
8
5
21
5
21
5
5
21
37
32
21
16
13
8
8
J
16
5
Number of Percent of
Process Performed Companies Companies
Nickel-Cadmium Diff. 1 37.
Nitriding 1 3
Oil 2 5
Oxidizing 4 11
Painting 6 16
Paint Stripping 5 13
Parkerizing 4 11
Passivating 10 26
Phosphating:
Manganese 4 11
Zinc 9 24
Iron 3 8
Pickling:
Still 9 24
Barrel 5 13
Plating on Plastics 1 3
Plating for Rubber Bond 3 8
Polishing and Buffing:
Manual 12 32
Automatic 6 16
Chemical 4 11
Rhodium Plating 1 3
Roto Finishing 2 5
Rust Proofing 5 13
Sand Blasting 3 8
Scratching 1 3
Satin Chrome Plating 11 29
Selective Plating 7 18
Silver Plating 2 5
Spraying: 5 13
Dipping and Brush 1 3
Solid Film Lubricant
Electrofilm 1 3
Tin Plating:
Still 5 13
Barrel 5 13
Tumbling 7 18
Zinc Plating:
Still 13 34
Barrel 12 32
Automatic 3 8
Semi-Automatic 1 3
Bright-Die Casting 5 13
-------
Company
Number
1
3
7
11
14
15
18
20
21
22
23
24
26
27
30
33
37
38
Painting
Paint Stripping
Spraying
Lacquering
X
X
X
X
X
X
X
X
X
X
X
X
Bright Dipping
Acid Dipping
Degreasing
Etching
Metal Stripping
Oil
Pickling
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Alodizing
Alumiliting
Anodizing
X
X
X
X
X
X
X
Bonderizing
Phosphating
Rust Proofing
Oxidizing
Parkerizing
X
X .
X
X
X
X
X
X
X
X
X
Brass Plating
Bronze Plating
Cadmium Plating
Lead Plating
Electroless
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING INDUSTRY
ANALYSIS OF OHIO METAL FINISHING COMPANIES BY TYPE OF PROCESS
Debarring
Grinding
Grit Blasting
Polishing and Buffing
Sand Blasting
Scratching
Tumbling
Burnishing
Precious Metal Plating
Silver
Gold
Indium
Rhodium
Anodizing
Chromicacid
Dichromating
Chromating
Chrome Plating
X
X
X
X
X
X
X
X
X
X
Source: Ohio Association of Metal Finishers (Exhibit VI-1).
<
-------
EXHIBIT V-3
ENVIRONMENTAL PROTECTION AGENCY
ECONOMIC IMPACT OF POLLUTION ABATEMENT
ON THE METAL FINISHING INDUSTRY
COMMON CHARACTERISTICS
Metals Used
Antimony
Arsenic
Brass
Bronze
Cadmium
Chromium
Copper
Gold
Indium
Iron
Lead
Nickel
Palladium
Platinum
Rhodium
Ruthenium
Silver
Tin
Zinc
OF PLATING SOLUTION
Acid
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Types of
Akaline
X
X
X
X
X
X
X
X
X
X
Baths
Cyanide*
X
X
X
X
X
X
X
X
'''Only if Alkaline Bath is used.
Source: Metal Finishing Guidebook Directory.
-------
ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING INDUSTRY
TYPICAL PROCESS FLOWS
TJ
00
(P
n
M
X
X
M
HI
ND
-------
METAL FINISHING INDUSTRY
TYPICAL PROCESS FLOWS
Type of
Finishing
Plating:
Nickel -Chrome
Zinc
Phosphating
Anodizing
Metal Strip
- Nickel-Chrome
Electro Polishing
Opromate Conversion
Organic Coating
Rack or
Barrel
Loading
1
1
1
1
1
1
1
1
Primary
Cleaning
1
1
2
1
-
1
4
1
Hot or
Cold
Rinsing
12
8
6
8
4
6
4
2
Number
Secondary
Cleaning
2
1
-
-
-
1
2
1
of Steps in Operational Sequence
Acid or
Alkaline
Treating
2
1
2
2
1
2
-
2
Plating
or Other
Treating
2
1
1
1
2
1
1
1
Dragout Other
Trappings Processes
2
1 2
1
2
1
1
1
3
bnloadin^
1
1
1
1
1
1
1
1
1?
Source: A. T. Kearney, Inc.
Mt-
-------
ENVIRONMENT PROTECTION AGENCY
METAL FINISHING INDUSTRY
BAITELLE COLUMBUS LABORATORIES ESTIMATED INVESTMENT COST
BPT TECHNOLOGY
Minimum
Plant ^ _ Five Employees _ __ Ten Employees Twenty Employees Twenty Plus Employees (47)
Cost A B C D " A B yC 6 A T5 - E— ^T - D - - 5 - ^"B - "T! - - 1T
Basic Equipment (Holding Pits,
~Tanks, Valves, Pumps, Filters) $ 7,700 $13,495 $17,520 $19,435 $24,050 $15,965 $20,545 $24,480 $28,220 $20,895 $25,145 $28,460 $ 36,565 $ 49,550 $ 55,380 $ 55,090 $ 60,430
Clarifier 8,000 12,550 12,550 14,900 14,900 19,100 19,000 22,400 22,400 25,400 25,400 28,000 28,000 47,100 47,100 49,600 50,600
Other Equipment
Evaporator ---.. .... _,.. 146,000 146,000 146,000 146,000
Ion Exchange ----- .... .... 550 550
Sultonacor - - . 3i550 3,550 - - 3,550 3,550 - - 3,550 3,550 - - 3,550 3,550
Chlorinator - - 3,550 - 3.550 : 3,550 - 3.550 - 3.550 : 3,550 - 3,550 - 3.550
Total Equipment Cost $15,700 $26,045 $33,620 $37,885 $46,050 $35,065 $43,095 $50,430 $57,720 $46,295 $54,095 $60,010 $ 71,665 $243,200 $252,580 $254,240 $264,130
r.-atoent Building and Land - 4,050 5,995 8,270 10,095 9,825 11,945 15,305 16,970 13,225 18,845 19,345 21,505 29,980 33,665 45,070 46,080
Equipment Installation 2,000 5,210 6,725 7,580 9,210 7,015 8.620 10,090 11,545 9.260 10,820 12,005 14,335 48,640 50,520 50,850 52.830
Total Investment Cost
$17,700 $^35^305 $46^340 $53^735 S6JO55 551,905 $63,660 $75,825 $86,235 $68,780 $83,760 $91,360 $107,505 $321,820 $336,765 $350,160 $363,040
Note- (1) The minimum plant costs although presented by Battelle were not utilized in
determining costs for each establishment size category.
Source: Battelle Columbus Laboratories
A. T. Kearney, Inc. Estimates
f
Ul
-------
Number of
Employees
Minimum Plant Size(5)
10
20
20+
Type of
Treatment
A
B
C
D
A
B
C
D
A
B
C
D
A
B
C
D
ENVIRONMENTAL PROTECTION
METAL
AGENCY
FINISHING INDUSTRY
ANNUAL OPERATIONS COSTS -
Investment
Costs(l)
$ 17 700
35,305
46,340
53,735
65,355
51,905
63,660
75,825
86,235
68,780
83,760
91,360
107,505
321,820
336,765
350,160
363,040
ALTERNATE A
Cost of
Capital(2)
$ 885
1,765
2,317
2,686
3,267
2,095
3,183
3,791
4,311
3,439
4,188
4,568
5,375
16,091
16,832
17,508
18,152
FOR BPT
Annual Operating
Costs
Depreciation(3) Other Costs (4)
$ 1,770
3,530
4,634
5,374
6,536
5,190
6,366
7,582
8,624
6,878
8,376
9,136
10,750
32,182
33,676
35,016
36,304
$ 7,500
7,807
10,723
12,876
13,902
19,309
27,326
25,985
32,330
33,930
44,276
40,739
50,885
62,218
74,333
66,514
90,916
Total
$ 10,155
13,102
17,674
20,936
23,705
26,594
36,875
37,358
45,265
44,247
56,840
54,443
67,010
110,491
124,841
119,038
145,372
Notes: (1) Exhibit V-5.
(2) 10% of Average Investment.
(3) Straight line depreciation - 10 year life - direct dischargers.
(4) Exhibit V-5, page 2 includes labor, other variable costs, and
costs for Ion Exchange and Evaporator Units.
(5) Although Battelle Columbus Laboratories calculated minimum plant
costs, these were not utilized because the minimum establishment
costs did not reflect the same model plant variation that was
established by the process group type analysis.
Source: Battelle Columbus Laboratories
A. T. Kearney, Inc. Estimates
-------
ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING INDUSTRY
ADJUSTED ANNUAL OPERATIONS COSTS FOR PRETREATMENT
Alternate B
Number of
Employees
Type of
Treatment
Minimum
Plant Size(5)
10
20
20+ (47)
A
B
C
D
A
B
C
A
B
C
D
A
B
C
D
Investment (1)
Costs
$ 9,700
22,980
34,100
39,255
50,975
33,460
45,380
54,390
44,180
59,560
64,535
80,790
276,545
291,700
303,350
315,305
Annual Operating Costs
Cost of
Capital (2)
$ 485
1,149
1,705
1,963
2,456
1,673
2,269
2,719
2,209
2,478
3,227
4,039
13,873
14,585
15,168
15,765
Depreciation (3) Other Costs (4) Total
$ 970
2,298
3,410
3,926
5,098
3,346
4,538
5,439
4,418
5,956
6,454
8,079
27,646
29,170
30,335
31,531
$ 7,507 $ 8,962
7,807
10,723
12,876
13,902
19,309
27,326
25,985
33,930
44,276
40,739
50,885
62,218
74,333
66,514
90,916
11,254
15,838
18,765
21,456
24,328
34,133
34,143
40,457
52,710
50,420
63,003
103,737
118,088
112,017
138,212
Notes:
(5)
Exhibit V-5, Less Clarifier Costs
10 percent of Average Investment
10 percent of Investment
Exhibit V-5, page 2 includes labor, other variable costs, and
costs for Ion Exchange and Evaporator Units
Although Battelle Columbus Laboratories calculated minimum plant
costs, these were not utilized because the minimum establishment
costs did not reflect the same model plant variation that was
established by the process group type analysis.
Source: Battelle Columbus Laboratories
A. T. Kearney, Inc. Estimates
-------
ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING INDUSTRY
BPT ANNUAL COSTS
PROCESS GROUP A ESTABLISHMENTS
Model Plant Sizes (Employees)
Industry Plant Size Range (Employees)
Average Number ofEmployees
Process Rate (m2/hour)
Water Use (I/hour)
Annual Costs
Fixed:
Cost of Capital(l)
Depreciation (2)
Labor (
Variable Costs' '
Evaporator Savings
Total Costs
1973 Dollars (5)
Minimum^ '
2
4,500
5
1-4
2
75
6,000
10
5-9
7
170
13,600
20
10-19
14
290
23,200
20 + (47)
20-49
30
685
54,800
(4)
50-99
67
975
78,000
100-249
140
2,000
163,000
250 or more
350
5,000
408,000
$ 885
1,770
4,000
1,400
$ 8,055
$ 1,765
3,530
4,000
1,523
$10,818
$ 2,095
5,190
12,000
5,116
$24,401
$ 3,439
6,878
24,000
6,951
$41,268
$16,091
32,182
32,000
21,648
(2,392)
$99,529
$ 23,000
46,000
46,000
48,000
(5,000)
$158,000
$ 48,000
96,000
96,000
100,000
(11,000)
$329,000
$120,000
240,000
240,000
249,000
(28,000)
$821,000
$ 7,636 $10,255 $23,132 $39,122 $94,353 $149",780 $311,890 $778,300
Adjusted Capital Costs -
.$31,464
,201 $65^203
Notes: (1) Exhibit V-6.
(2) Exhibit V-6.
(3) Exhibit V-6, variable costs adjusted for average employment in Plant Groups.
(4) Cost estimated based on extrapolation of Battelle Columbus Laboratories (20+)
Model Plant Costs.
(5) Totals adjusted by factor of .948 to reflect 1972 dollars.
(6) Investment costs as shown in Exhibit V-6 adjusted to 1973 price levels by
using a factor of .948.
(7) Although Battelle Columbus Laboratories calculated minimum plant costs, these
were not utilized because the minimum establishment costs did not reflect the
same model plant variation that was established by the process group type
analysis .
X
33
Source: Battelle Columbus Laboratories
A. T. Kearney, Inc0 Estimates
-------
ENVIRONMENTAL PROTECTION AGENCY
Model Plant Sizes (Employees)
Industry Plant Size Range (Employees)
Average Number of Employees
Process Rate (m2/hour)
Water Use (I/hour)
Annual Costs
Fixed:
Cost of Capital(l)
Depreciation(l)
Labor(2)
Variable Costs(3)
Evaporator Savings (Net)(4)
Total Costs
1973 Dollars (5)
Adjusted Capital Costs - 1973^6)
Minimum'')
4,500
$ 885
1,770
4,000
1,400
$ 8,055
TT7636
METAL FINISHING INDUSTRY
BPT
ANNUAL COSTS
PROCESS GROUP B ESTABLISHMENTS
7) 5
1-4
2
75
6,000
$ 2,317
4,634
4,000
2,689
$13,640
$12,930
10
5-9
7
170
13,600
$ 3,183
6,366
12,000
10,728
$32,277
$30,600
20
10-19
14
290
23,200
$ 4,188
8,376
24,000
14,193
$50,757
$48,120
20 + (47)
20-49
30
705
54,800
$ 16,832
33,676
32,000
29,413
(2,392)
$109,529
$103,830
S4U3Q 160^349 17
-------
ENVIRONMENTAL PROTECTION AGENCY
Model Plant Sizes (Employees)
Industry Plant Size Range (Employees)
Average Number of Employees
Process Rate (m^/hour
Water Use (I/hour)
Annual Costs
Fixed:
Cost of Capital(l)
Depreciation(l)
Labor(2)
Variable(3)
Evaporator Savings (Net)
Total Costs
1973 Dollars (5)
Adjusted Capital Costs - 19.73
(6)
METAL FINISHING INDUSTRY
BPT ANNUAL COSTS
PROCESS GROUP C ESTABLISHMENTS
Minimum ( ' '
2
4,500
$ 885
1,770
4,000
1,400
$ 8,055
$ 7,636
316.780
5
1-4
2
100
8,000
$ 2,686
5,374
4,000
3,550
$15,610
$14,800
15<1»S46
10
5-9
7
280
18,400
$ 3,791
7,582
12,000
9,790
$33,163
$31,400
171,877
20
10-19
14
390
30,400
$ 4,568
9,136
24,000
11,717
$49,421
$46,850
.$-86,609.
20 + (47)
20-49
30
775
61,600
$ 17,508
35,016
32,000
24,422
(2,392)
$106,544
$101,000
J-L33U9J52
- (4)
50-99
67
1,105
88,000
$ 25,000
50,000
46,000
55,000
(5,000)
$171, OOC
$162,100
.$414^000
- (4)
100-249
140
2,300
183,000
$ 52,000
104,000
96 000
114,000
(11,000)
$355,000
$336,500
1985^920
- (4)
250 or more
350
5,800
458,000
$130,000
261,000
240.000
285,000
(28,000)
$888,000
$841,800
12,47-4,2.80
Notes: (1) Exhibit V-6.
(2) Exhibit V-6.
(3) Exhibit V-6, variable costs adjusted for average employment in Plant Groups.
(4) Cost estimated based on extrapolation of Battelle Columbus Laboratories (20+)
Model Plant Costs.
(5) Totals adjusted by factor of .948 to reflect 1973 dollars.
(6) Investment costs as shown in Exhibit V-6 adjusted to 1973 price levels by
using a factor of .948.
(7) Although Battelle Columbus Laboratories calculated minimum plant costs, these
were not utilized because the minimum establishment costs did not reflect the
same model plant variation that was established by the process group type analysis.
Source: Battelle Columbus Laboratories
A. T. Kearney, Inc. Estimates
X
h-i
w
<
I
-------
ENVIRONMENTAL PROTECTION AGENCY
Model Plant Sizes (Employees)
Industry Plant Size Range (Employees)
Average Number of Employees
Process Rate (m2/hour)
Water Use (I/hour)
Annual Costs
Fixed:
Cost of Capital (1)
Depreciation(l)
Labor (2)
Variable(3)
Evaporator Savings (Net)
Total Costs
1973 Dollars (5)
Adjusted Capital Costs - 1973
METAL r •
BPT
NISHING INDUSTRY
ANNUAL COSTS
PROCESS GROUP D ESTABLISHMENTS
Minimum^6)
2
4,500
$ 885
1,770
4,000
1,400
$ 8,055
$ 7,636
116^779
5
1-4
2
IOC
8,000
$ 3,267
6,536
4,000
3,960
$17,763
"$167550
161^961
10
5-9
7
280
18,400
$ 4,311
8,624
12,000
14,231
$39,166
T377T30
MU216
20
10-19
14
390
30,400
$ 5,375
10,750
24,000
18,820
$58,945
T537880
H£ifc£i2
20 + (47)
20-49
30
815
65,200
$ 18,152
36,304
32,000
39,998
(2,392)
$124,062
"$117,610
1344O62
- (4)
50-99
67
1,160
93,000
$ 26,000
52,000
46,000
89,000
(5,000)
$208,000
$197,180
$492,960
- (4)
100-249
140
2,430
194,000
$ 54,000
108,000
96,000
187,000
(11,000)
$434,000
$411,400
$1,023.840
-(4)
250 or more
350
6,100
485,000
$ 135,000
270,000
240,000
466,000
(28,000)
$1,083,000
$1,026,700
^2^55^600
Notes: (1) Exhibit V-6.
(2) Exhibit V-6.
(3) Exhibit V-6, variable costs adjusted for average employment in Plant Groups.
(4) Cost estimated based on extrapolation of Battelle Columbus Laboratories (20+)
Model Plant Costs.
(5) Totals adjusted by factor of .948 to reflect 1973 dollars.
(6) Investment costs as shown in Exhibit V-6 adjusted to 1973 price levels by
using a factor of .948.
(7) Although Battelle Columbus Laboratories calculated minimum plant costs, these
were not utilized because the minimum establishment costs did not reflect the
same model plant variation that was established by the process group type
analysis.
Source: Battelle Columbus Laboratories
A. T. Kearney, Inc. Estimates
-------
ENVIRONMENTAL PROTECTION AGENCY
ModnL P].,v£r Size (Employees)
Industry Plant Size Range (Employees)
Average Number of Employees
Process Rate (m2/hour)
Water Use (I/hour)
Annual costs
Fixed: Q\
Cost of Capital
Depreciation(2)
Labor(2)
Variable CostsC3)
Evaporator Savings Net
Total Costs
1973 Dollars (5)
Adj_usted Capital Costs - 1973
MinimumC6)
2
4,500
$
485
970
4,000
1,400
$6,499
METAL FINISHING INDUSTRY
PRETREATMENT ANNUAL
COSTS
PROCESS GROUP A ESTABLISHMENTS
) 5
1-4
2
75
6,000
$1,149
2,298
4,000
1,523
$8,503
121,785
10
5-9
7
170
13,600
$ 1,673
3,346
12,000
5,116
$22.135
$20,984
131.710
20
10-19
14
290
23,200
$ 2,209
4,418
24,000
6,951
$37.578
$35,624
141.883
20 + (47)
20-49
30
685
54,800
$13,873
27,646
32,000
21,648
(2,392)
$92.775
$87,950
1262.084
- (4)
50-99
67
975
78,000
$ 19,705
39,410
46,000
48,000
(5,000)
$148.115
$140,413
1373.607
- (4)
100-249
140
2,000
163,000
$ 41,000
82,000
96,000
100,000
(11,000)
$308.000
$292,000
J77ZJ60
- (4)
250 or more
350
5,000
408,000
$103,000
206,000
240,000
249,000
(28,000)
$770,000
$730,000
.$1.952,880
Notes:
Source:
(1) Exhibit V-7.
(2) Exhibit V-7.
3) Exhibit V-7, variable costs adjusted for average employment in Plant Groups.
4) Cost estimated based on extrapolation of Battelle Columbus Laboratories (20+)
Model Plant Costs.
(5) Totals adjusted by factor of .948 to reflect 1973 dollars.
(.6) Investment costs as shown in Exhibit V-7 adjusted to 1973 price levels by
using a factor of .948.
(7) Although Battelle Columbus Laboratories calculated minimum plant costs, these
were not utilized because the minimum establishment costs did not reflect the
same model plant variation that was established by the process group type
analysis.
Battelle Columbus Laboratories
A. T. Kearney, Inc. Estimates
-------
ENVIRONMENTAL PROTECTION AGENCY
Model Plant Size (Employees)
Industry Plant Size Range (Employees)
Average Number of Employees
Process Rate (m2/hour)
Water Use (I/hour)
Annual Costs
Fixed:
Cost of Capital (1)
Depreciation (2)
Labor (2)
Variable Costs (3)
Evaporator Savings Net
Total Costs
1973 Dollars (5)
Adjusted Capital Costs - 1973
Minimum^"'
4,500
485
970
4,000
1,400
METAL FINISHING INDUSTRY
PRETREATMENT ANNUAL
COSTS
PROCESS GROUP B ESTABLISHMENTS
) 5
1-4
2
75
6,OOC
$ 1,705
3,410
4,000
2,689
$11,804
$11,190
132,327
10
5-9
7
170
13,600
$ 2,227
4,454
12,000
10,728
$27,900
^2^22A
20
10-19
14
290
23,200
$ 2,478
5,956
24,000
14,193
$44,200
20 + (47)
20-49
30
705
54,800
$ 14,585
29,170
32,000
29,413
(2,392)
$ 97,430
127^122
- (4)
50-99
67
1,000
78,000
$ 21,000
42,000
46,000
65,000
(5,000)
$169.000
$160,200
$398,160
- (M
100-249
140
2,100
163,000
$ 44,000
87,000
96,000
136,000
(11,000)
$333,700
£824^160
- (4)
250 or more
350
5,300
408,000
$109,000
217,000
240,000
339,000
(28,000)
$831,400
^2^057^1-60
Notes: (1) Exhibit V-7.
(2) Exhibit V-7.
(3) Exhibit V-7, variable costs adjusted for average employment in Plant Groups.
(4) Cost estimated based on extrapolation of Battelle Columbus Laboratories (20+)
Model Plant Costs.
(5) Totals adjusted by factor of .948 to reflect 1973 dollars.
(6) Investment costs as shown in Exhibit V-7 adjusted to 1973 price levels by
using a factor of .948.
(7) Although Battelle Columbus Laboratories calculated minimum plant costs, these
were not utilized because the minimum establishment costs did not reflect the
same model plant variation that was established by the process group type
analysis.
Source: Battelle Columbus Laboratories
A. T. Kearney, Inc. Estimates
M
X
60
11
)—'
ll-O
-------
Model Plant Size (Employees)
Industry Plant Size Range (Employees)
Average Namber of Employees
Process Rate (m2/hour)
Water Use (I/hour)
Annual Costs
Fixed:
Cost of Capital (1)
Depreciation (2)
Labor (2)
Variable Costs (3)
Evaporator Savings Net
Total Costs
1973 Dollars (5)
Adjusted Capital Costs - 1973
ENVIRONMENTAL
PROTECTION AGENCY
METAL FINISHING INDUSTRY
P RE TREATMENT ANNUAL
Minimum(6)
2
4,500
$ 485
970
4,000
1,400
$6.855
$6,499
.$3^196
PROCESS GROUP
5
1-4
2
100
8,000
$ 1,513
3,026
4,000
3,550
$12.089
$11,460
-$^1*681
COSTS
C ESTABLISHMENTS
10
5-9
7
280
18,400
$ 2,719
5,439
12,000
9,760
$29.918
$25,360
151.562
20
10-19
14
390
30,400
$ 3,227
6,454
24,000
11,717
$45.398
$43,000
16JLO84
20 + (47)
20-49
30
775
61,600
$15,168
30,335
32,000
24,422
(2,392)
$29,533
$94,360
$287.576
- (4)
50-99
67
1,105
88,000
$ 22,000
43,000
46,000
55,000
(5,000)
$161.000
$152,600
- (4)
100-249
140
2,300
183,000
$ 45,000
90,000
96,000
114,000
(11,000)
$334.000
$316,600
- (4)
250 or more
350
5,800
458,000
$113,000
226,000
240,000
285,000
(28,000)
$8J36.000
$792,500
J407^640 .$853,2.00 12,142,480
Notes: (1) Exhibit V-7.
(2) Exhibit V-7.
(3) Exhibit V-7, variable costs adjusted for average employment in Plant Groups.
(4) Cost estimated based on extrapolation of Battelle Columbus Laboratories (20+)
Model Plant Costs.
(5) Totals adjusted by factor of .948 to reflect 1973 dollars.
(6) Investment costs as shown in Exhibit V-6 and V-7 adjusted to 1973 price
levels by using a factor of .948.
(7) Although Battelle Columbus Laboratories calculated minimum plant costs, these
were not utilized because the minimum establishment costs did not reflect the
same model plant variation that was established by the process group type
analysis.
Source: Battelle Columbus Laboratories
A. T. Kearney, Inc. Estimates
w
X
I
I—I
-O
-------
ENVIRONMENTAL PROTECTION AGENCY
Model Plant Size (Employees) Minimum^
Industry Plant Size Range (Employees)
Average Number of Employees 2
Process Rate (m2/hour)
Water Use (I/hour) 4,500
Annual Costs
Fixed:
Cost of Capital(1) $ 485
Depreciation(2) 970
Labor(2) 4,000
Variable Costs(3) 1,400
Evaporator Savings Net -_
Total Costs
1973 DollarsC5)
Adjusted Capital Costs - 1973 (&_, 196
METAL FINISHING INDUSTRY
PRETREATMENT ANNUAL COSTS
PROCESS GROUP D ESTABLISHMENTS
> 5
1-4
2
100
8,000
$ 2,546
5,098
4,000
3,960
$15,604
$14,790
£48^329
10
5-9
7
280
18,400
$ 3,244
6,488
12,000
14,231
$35.963
$34,100
.S6U5Q6
20
10-19
14
390
30,400
$ 4,039
8,079
24,000
18,820
$54.938
$52,100
JL7
Ui
-------
HPACT ANALYSTS
A - BASELINE INDUSTRY BuRECAST
To determine the economic impact of the proposed effluent
guidelines on the metal finishing industry, a baseline industry
forecast must be established. This forecast projects industry
conditions without consideration to the impacts of environment".!
control. The impacts arising from enforcement of -:he effliv—t
guidelines in 1977 and 1983 can then be measured against this b :se
Appendix C - Baseline Forecast Model explains the mc'thodol-
ogy used to generate the estimates preserved in _Uif secti v...
This section presents Kearney's Laseline tstimaf.es CL fMtur^
growth of the industry under three subject headings • Marke~ Co\j
ditions, Baseline Forecast, and MarKet Assusiptior/s
MARKET
CONDITIONS
(a) Growth
Rate
The growth of the metal finishing industry is directly re-
lated to the growth of the industries using metal finishing
services. Therefore, one of the primary forecast cotsiderarions
is the projected growth of the customer group of Industries.
Since most metal finishing establishments supply a Vc/rletv
of customers, the aggregate growth trend of ;:he .major custJ'T__ ,
such as auto, aircraft, household appliances, and "XV is use] t."
-------
VI - 2
generate the forecast estimates. The past growth of these customer
industries is expected to continue according to U.S. Department
of Commerce projections. ' The projections in U.S. Industrial
Dutlook 1974 use the basic assumptions that car production will
increase from 9 million presently to 11 million per year in 1980
and that housing starts will continue at 2 million per year.
Based on these assumptions, growth rates for customers of the
metal finishing industry are projected by the Department of Com-
merce. These are summarized in the table below.
Table VI-1
Projected Range of Growth Rates
of Customer Industries
Projected Average
Annual Rate of
Increase for the
Customer Industry Period 1974-1980
Low High
Automotive 2.5% 3.5%
Trucks 4.0 4.5
Aircraft -0.7 0.3
Missiles 4.0 4.9
Household Appliances 6.3 6.9
Electronics 4.3 6.9
Radio 6.5 8.0
Television 7.5 10.0
Industrial Machinery 6.8 7.5
Source: U.S. Industrial Outlook, U.S. Department of Commerce-
The average aggregate growth of the metal finishing custo-
mer industries can be projected,for the period 1974-1980 at
between 4.6% and 5.7%, based on a simple average of the rates
(1) U.S. Industrial Outlook 1974, with Projections to 1980,
United States Department of Commerce.
-------
VI - 3
cited in the table on the preceding page. Since the consumption
of finishing services per customer industry is unknown, a simple
C2)
average is used. The rate of growth for detailed segments of
these industries is projected in Appendix C using a time trend
and falls in the range cited.
(b) Size
Trends
Increased volume of customer business will require additional
capacity in the metal finishing industry. Future entry into the
metal finishing industry by new firms will be possible since the
cost of entry is anticipated to remain low. Therefore, an increase
in consumer demand will lead to additional firms entering the in-
dustry as well as to expansion by present firms.
The distribution of establishments within the metal finish-
ing industry according to size is an important consideration to
both the baseline forecast -and impact assessment. The market
share of small establishments has been decreasing, according to
the 1958, 1963, and 1967 Census of Manufactures. Exhibits
C-l and C-2 of Appendix C depict these trends. Table VI-2 on the
following page summarizes these market share statistics.
(2) The growth of major metal finishing service consuming SIC
industries (on a four or more digit basis) is used to project
the future consumption of metal finishing services. See
Appendix C for data utilized.
-------
VI - 4
Market Share Trends in che
Metal V vnishing Industry
Establishment
Market Share as a
Size by Number
or Employees
1
5
10
2U
50
IOC
2M-
To
4
9
- 19
- 49
- 99
- 249
- 499
tal
1958
~J *"» O1'
/ . J/o
9.8
16.9
30.4
19.6
13.1
2.9
100.0%
Reported
1.963
5.0%
8.2
6.1
30.1
21.6
12. 3
5.2
100.0%
Percent of
Total Value Added
Projected
1967
4.6%
7.0
1^.1
3-J.8
20.2
17.7
5.6
100.0%
1977
3.8%
5.7
12.7
30.8
20.2
18.9
7.9
100.0%
1983
3.32
4.9
12 . 4
30.8
20.2
19.4
9.0
100. o;;
Source: Census of Manufactures, 1958, 1963, 1967 and
Kearney projections.
From the table note the following:
1. The market share for establishments of 1 to 19 employ-
ees as projected steadily decreased from 1958 to 1967 and is pro-
jected to further decrease in 1977 and 1983. This trend must be
considered in forecasting the number of metal finishing estab-
lishments .
2. Establishments of 20 to 99 employees retained about
the same market share from 1958 to 1967 and is projected to retain
the same share in 1977 and 1983.
3. Metal finishing firms of over 100 employees have
in general experienced an increasing market s^are. The most sub-
stantial increase in market share has taken place in establish-
ments over 250 employees.
4. These data confirm the existence of overall scale
economies in the metal finish/^ig incite.tTV. DisecoT.-n ;.es of si% 11
si~e occur because some resources are ; acerutilized a. low v^i ,.ri=/s.
-------
VI - 5
(c) Foreign
Competition
Foreign competition from finished products (requiring metal
finishing) and foreign metal finishers is not expected to increase
during the 1977-1983 period. The current price differential, which
is attributed to transportation, production, and import duty factors,
is expected to continue. Therefore no change in foreign competition
is anticipated.
BASELINE
FORECAST
The characterization of the 1977 and 1983 metal finishing
industry in terms of total services demanded and number of companies
was based on a forecast of the consumer industry growth and the
trend established in terms of market share for each establishment
size. The technique utilized in developing the forecast is based
on a regression analysis of the historical customer industry growth
with metal finishing business volume. A full description of the
forecast model which is used to generate the forecasts is presented
in Appendix C - Baseline Forecast Model.
(a) Establishments
by Size
Forecasts of number of firms in the metal finishing industry
are summarized in Table VI-3. Detailed forecasts of the number of
firms by process segment and employment for 1977 and 1983 are
presented in Exhibits VI-1 and VI-2 respectively. No significant
increase in the total number of firms is forecasted over the period
of 1^67-1983 This is consistent with the decline of 1470 from
-------
VI - 6
1967 to 1972 for all establishments in SIC 3471 and 3479.
Table VI-3
Forecast of Number of Establishments
in the Metal Finishing Industry
Size of Establishment Number of Establishments
by Number of Employees 1967 1977 1983
1-4 376 328 247
5-9 167 140 116
10 - 19 163 193 230
20 - 49 171 209 249
50 - 99 46 57 67
100 - 249 23 27 33
250 - 499 _Jh _6 9
Total 950 960 951
Source: Exhibits 1-6, VI-1, and VI-2.
From the table note that:
1. The number of small establishments decreases from
1967 through 1983.
2. For all establishments of ten or more employees
there will be additional firms entering the market between 1967
and 1983. The larger firms grow in number and market share in
accordance to the trends projected in Appendix C.
3. There will be a continuous deterioration in the posi-
tion of the small establishment even in the absence of pollution
control regulations. (Absence of such regulation is the under-
lying condition of the baseline forecast.)
(b) Employment
Projections can also be made for the employment within the
industry, and these are summarized in Table VI-4 on the following
page. Detailed employment projections by process segment and firm
-------
VI - 7
size for 1977 and 1983 are presented in Exhibits VI-3 and VI-4
respectively.
Industry employment trends are highly correlated to the
growth of the customer industries. Since a steady increase in
customer growth is projected through 1983, total industry employ-
ment is expected to rise. However, fluctuations in employment
levels may occur as there have been variations in customer industry
growth such as the early 1970 period. Production level and cus-
tomer growth data are presented in Exhibit C-3 of Appendix C.
Table VI-4
Forecast of Employment Within
the Metal Finishing Industry
Size of Establishment 1967 1977 1983
by Number of Employees Employment Employment Employment
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 and over
Total 17,054 20,750 24,309
Source: Exhibits 1-9, VI-3 and VI-4.
From the table the following should be noted:
1. Total industry employment will increase from 17,054
in 1967 to 24,993 in 1983.
2. The total employment of establishments with less
than 10 employees will decline between 1967 and 1983.
3. Increase in employment will occur in the larger
establishments.
659
1,119
2,300
5,301
3,055
3,220
1,400
471
941
2,739
6,461
3,794
4,328
2,016
314
796
3,231
7,662
4,460
5,386
2,460
-------
VI - 8
(c) Value of
Shipments
The projections for Value of Shipments of the metal
finishing industry describe the expected business volume. Summary
statistics appear in Table VI-5 and detailed projections by process
segment and firm size for 1977 and 1983 are presented in Exhibits
VI-5 and VI-6 respectively. All values presented are expressed
in terms of 1973 constant dollars. Thus, the 1967 value of ship-
ments taken from Exhibit 1-9 has been adjusted to 1973 dollars.
Table VI-5
Forecast of Value of Shipments
Within the Metal Finishing Industry
Size of Establishment
by Number of Employees
1
5
10
20
50
100
250
4
9
- 19
- 49
- 99
- 249
and over
Total
1967 Value
of Shipments
(^Million)
$ 19.5
21.4
41.6
105.9
70.8
90.4
33.1
$382. 7
1977 Value
of Shipments
(^Million)
$ 12.2
22.3
61.8
144.3
102. 3
114.8
65.1
$522.8
1983 Value
of Shipments
($Million)
$ 9.0
21.4
82.6
191.2
137.5
155.3
90.0
$687. 0
Source: Exhibits 1-9, VI-5 and VI-6.
From the table above, note the following:
1. The value of shipments is projected to rise for the
metal finishing industry through 1983.
2. The value of shipments for the smaller establish-
ments will decrease through 1983.
3. The most dramatic increase will occur in the larger
establishments with over 100 employees. Thi,; i," Anticipated
-------
VI - 9
because of a trend toward an increasing market snare.
(d) Process Segment
Forecast
The final forecast relates co the growth of process segments
within the metal finishing Industry. Each process is expected to
increase proportionately with industry growth. This is due to
the assumption that the mix of customer demand will not change and
no technology will be introduced during the forecast period which
will affect the usage of the major process segments. Additional
competition from substitutes and imports is not anticipated. The
1977 and 1983 projections of number of establishments by process
segment are summarized in Table VI-6.
Table VI-6
Number of Establishments Forecast
by Process Segment
Process Segment
Cadmium Plating
Precious Metal Plating
Anodizing
Pickling
Phosphatizing
Etching
Total
1967
109
152
362
80
35
212
950
1977
108
150
358
85
37
222
960
1983
106
147
348
87
38
225
951
Source: Exhibits VI-1 and VI-2.
From the table note that:
1. The number of establishments performing cadmium
plating, precious metal plating, and anodizing will decrease from
1967 to 1977.
2. Hi'-- Dumber -. :~ esc j ,'lishments (:• .:forming p^os
-------
VI - 10
pickling, and etching will increase from 1967 to 1977.
3. The contrasting trends of these processing segments
is due to the difference in SIC 3471 and 3479 trends related to
employment and market share. Appendix C illustrates and explains
these statistical trends and projections in detail.
The 1977 and 1983 projections of employment by process seg-
ment are presented in Table VI-7.
Table VI-7
Employment Forecast
Process Segment
Cadmium Plating
Precious Metal Plating
Anodizing
Pickling
Phosphatizing
Etching
Total
by Process Segment
Number of Employees
1967 1977
1,863 2,141
2,724 3,224
6,491 7,661
1,760 2,548
705 803
3,511 4,373
1983
2,522
3,699
8,903
2,808
1,097
5,280
17,054 20.750 24,309
Source: Exhibits 1-8, VI-3 and VI-4.
Note that employment will increase for all processes and
the metal finishing industry in total.
Value of shipments by process segment are projected for
1977 and 1983 in Table VI-8.
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VI - 11
Table VI-8
Value of Shipments Forecast
by Process Segment
(1973 dollars)
Process Segment
Value of Shipments
^Millions of Dollars)
1967 1977 1983
$38.2
55.3
132.5
48.2
19.0
89.5
$382.7
$ 49.2
75.2
178.5
81.5
21.9
116.5
$522.8
$ 65.7
97.7
235.6
100.4
33.4
154.2
$687.0
Cadmium Plating
Precious Metal Plating
Anodizing
Pickling
Phosphatizing
Etching
Total
Sources: Exhibits 1-8, VI-5 and VI-6.
Note that the value of shipments will increase for all pro-
cess segments through 1983.
MARKET
ASSUMPTIONS
To obtain the forecast developed in this section several
assumptions must be specified. These are briefly described
below:
1. Major consumers of metal finishing services are
expected to grow at a stable rate and continue their demand for
metal finishing services.
2. New technology which would enhance the competitive
position of substitute services will not be developed before 1983
3. Imports will not be a significant factor at any
time during the forecast period.
-------
There will be no major business c>ole .luctuations
5. Trends in market share by firm size will continue
it a steady rate.
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VI - 13
B - PRICE EFFECTS
The adjustments to the market for metal finishing services
brought about by the effluent guidelines depend on the costs in-
curred and the price elasticity of demand for metal finishing
services. Changes in the metal finishing market can only be quan-
tified after such demand and supply factors have been established.
In this section, the following impact characteristics will be
analyzed.
Price Determination
- Market Price Adjustment to BAT/BPT Investment
Price Factors - 1977
Market Price Increases - 1977
- Price Factors - 1983
Market Price Increases - 1983
Elasticity of Demand
PRICE
DETERMINATION
The market for metal finishing services is very competitive.
The competition in the marketplace arises because:
1. There are numerous establishments competing for
available business in most markets.
2. There are no strong technological or capital bar-
riers to entry. Very small establishments are able to effectively
compete in the marketplace.
3. Actual and potential in-plant process operations are
a competitive alternative which customers can utilize. This
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VI - 14
alternative is by a large number of potential customers (See
Appendix A.)
Since there is a very competitive market, the prices of
rietal finishing services reflect their cost of production including
a return on the capital invested and entrepeneural income for owner-
managers. The competitive action of the marketplace forces high
cost firms to withdraw due to losses. However, within this com-
petitive framework some firms are partially protected from the
general market competition because of particular service special-
izations or geographic location.
Although metal finishing prices reflect costs, the prices
observed in the market vary. Variation in prices occurs because
of:
1. Differences in production costs and the impact of open
capacity at a given point in time.
2. Real differences in the services performed (quality,
delivery, service, schedule, etc.).
3. Lack of effective, strong competition in small market
segments based on geographic isolation and/or service specialization.
4. Institutional market characteristics (such as a lack of
specifications) which result in price variation for specific services.
5. The high cost of information generation for market
participants to identify low cost sellers (prices of metal finish-
ing services are generally not published) or high price buyers com-
bined with a relatively low dollar volume of purchases. Thus, the
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VI - 15
payoff from obtaining more competition on specific transactions is
not high enough to eliminate the price variation not a result of
factors (1), (2), (3) and (4) above.
In assessing the competitive nature of this industry, all
producers of metal finishing services must be considered. This
includes in-plant processes and foreign producers (with export
capability) of products where metal finishing contributes a large
portion of the value added. The in-plant processes do not compete
with independent firms directly. However, establishing an in-
plant process operation is a long-run alternative to purchasing.
Buyers would not consider setting up finishing operations in-
house unless costs were favorable in relation to market prices and
the volume of work sufficiently high to sustain the operation.
Foreign competition from finished products (requiring metal
finishing) and foreign metal finishers occurs only in limited
areas. Those items where finishing is a significant cost of pro-
duction, such as fasteners and screws, are the most popular
imported items. Domestic pricing of metal finishing services has
effectively sustained the competitive position of the domestic
metal finishing firms. The prices of metal finishing services must
continue to be competitive with regard to imported product cost.
Currently, domestic products enjoy a 5% to 1070 price advantage.
Thus, market prices for the metal finishing industry are de-
termined by production costs. In the short-run prices are held at
this level by competition between firms providing this service.
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VI - 16
In the longer run, this competition is maintained by ease of entry
of new firms, potential substitution of in-plant processes, and in
some instances, the potential of import competition.
MARKET PRICE
ADJUSTMENT TO
BAT/BPT INVESTMENT
Pollution control requirements will significantly increase the
annual operating costs of firms within the metal finishing industry.
These additional costs must be absorbed or passed on as price
increases. Since increased costs occur for all market participants,
market prices will reflect this condition. If price increases
reduce market volume to an extent that excess capacity and resources
are in the industry, then cost absorption will occur until resources
are withdrawn.
Even if required, the ability of plants to absorb part of the
pollution control cost is questionable. The dollar level of profits
for establishments as reported in Exhibit II-3 are compared with the
increased operating costs resulting from the proposed effluent
guidelines in Table VI-9. It is obvious cost absorption is not
possible for the small establishment.
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VI - 17
TabIP VI-9
Comparison Of Profits And Minimum
Pollution Control Operating Costs
Establishment Size Pollution Control
by Number of Profits Operating
Employees Before Tax Cost (1977)(1)
1-4 $ 7,120 $ 10,255
5-9 12,720 23,132
10 - 19 15,380 39,122
20 - 49 34,000 94,353
50 - 99 78,340 149,780
100 -249 123,460 311,890
250 -499 275,530 778,300
Note: (1) These costs are minimum costs for Process
Group A under 1977 Alternate A requirements.
Sources: Exhibits II-3, V-8, V-9, V-10 and V-ll.
Since the level of investment per establishment is not
presently high, operating losses would be significant in relation
to investment. Thus, a reduction in industry investments would
arise.
PRICE FACTORS
1977
This section shows the price increase factors required by
establishments in each size and process segment in order to recoup
their increased annual costs for meeting the proposed 1977 effluent
guidelines. Prices and costs are in constant 1973 dollars. Costs
and prices have been adjusted to the same year. This includes a
10% cost of capital based on the average investment required.
Consideration of the price factors by segment is required because
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VI - 18
annual costs estimated by Battelle Columbus Laboratories vary be-
tween these segments.
The specific costs incurred from meeting the effluent guide-
lines are additional depreciation, cost of capital, and equipment
operating expenses. These additional operating costs of pollution
control have been discussed in Section V.
There is an estimated lower and upper bound of treatment costs
depending on the types of metal finishing operations performed at
an establishment. The lower bound assumes that all establishments
specialize in one process group and do not have secondary opera-
tions. The upper bound assumes that all establishments have second-
ary operations. Thus, two price increases are calculated which
represent a lower and upper bound of possible price increase
factors. A range of possible price increases attributed to
projected pollution control costs is obtained by comparing the
lower and upper bound estimates. A compete description of the
methodology used to estimate the pollution control costs appears
in Section V.
Two alternatives are considered for the proposed 1977 Effluent
Guidelines as discussed in Section V. Therefore, two piices
increases must be considered for each alternative set of Standards
A and B.
-------
VI - 19
(a) Price Increase Factors
Associated With the 1977
Proposed Effluent Guidelines -
Alternate A
Alternate A assumes costs for municipal dischargers equal to
BPT treatment costs. The lower bound of price increase factors by
process segment and establishment size required to cover pollution
control costs for Alternative A in 1977 is presented in Table
VI-10.
Table VI-10
Lower Bound - Price Increase Factors
(as a Percent of Sales) by Process
Segment and Establishment Size -
Alternative A - 1977
Process Segment
24.8%
20.9
16.9
17.3
13.4
12.0
13.4
19.1%
15.8
13.7
15.7
11.9
10.6
11.9
Establishment Size Anodizing, Pickling
by Number of Cadmium Plating and Phosphatizing
Employees Precious Metal Plating and Etching
1-4
5-9
10 - 19
20 - 49
50 - 99
100 -249
250 and over
Source: Exhibits II-l, V-8, and V-9.
Note from the table the following:
1. Price change increases are highest for the small
metal finishing establishment regardless of process.
2. Price change increases are 1.4% to 5.7% higher for
the cadmium and precious metal plating establishments than for
other metal finishing processes because of the added treatment costs
of cyanide reduction.
-------
3. ihc -j ,jquiit;d price change as a poT.f-.nt rf sales
decreases with in; t-asing establishment rj^e. The price diffeter-
tial between large and snwll establishments is significant with -:
maximum difference of 12.870.
4. The variation between process segments in price
increase required in plants with 10 employees or more is relatively
low. The 10-19 employee size segment and the 250 and over segments
have a difference of only 3.5% and 1.5% in their price increase
requirements.
The upper bound of price increase factors by process segment:
and establishment size required to cover pollution control costs
for Alternative A in 1977 is presented in Table VI-11.
Table VI-11
Upper Bound - Price Increase Factors
(as a Percent of Sales) by Process
Segment and Establishment
Size - Alternative A - 1977)
Process Segment
Establishment Size
by Number of
Employees
1 . 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 and over
Cadmium
Plating
31.37,
25.4
19.6
19.6
15.6
14.0
15.6
Precious
Metal
Plating
24.87,
20.9
16.9
17.3
13.4
12.0
13.4
Anodizing
and
Phosphatizing
27.5%
21.5
16.5
16.8
12.8
11.4
12.8
Etching
and
Pickling
19.1%
15.8
13.7
15.7
11.9
10.6
11.9
Source: Exhibits II-1, V-8S V-9, V-10, and V-ll.
-------
VI - 21
It should be noted from the table that:
1. The highest price change increases are associated
with cadmium plating establishments. Anodizing and phosphatizing
establishments require the second highest price increase.
2. There is no change in the price increases from the
lower bound estimates for precious metal plating, pickling, and
etching establishments.
3. The price increase due to the pollution control costs
decreases with increased size. The greatest price difference due to
size within a process category is 15.770.
4. The variation ir. price change by process segment for
firms with more than 10 employees is much less than the variation
including the smallest size firms.
(b) Price Increase Factors
Associated With the
1977 Proposed Effluent
Guidelines - Alternate B
Alternate B presents costs for municipal dischargers which are
less than BPT treatment costs for direct dischargers. Both sets
of costs have been utilized to develop the required price increase
factors for each process and discharge segment. The lower bound
of price increase factors by process segment and establishment
size required to cover pollution control costs for Alternate B is
presented in Table VI-12.
-------
VI - 22
Table VI-12
Lower Bound - Price Increase Factors
(as a Percent of Sales) by Process
Segment and Establishment Size -
Alternative B - 1977
Establishment Size
by Number of
Employees
Process Segment
Cadmium Plating and
Precious Metal Plating
Anodizing, Pickling
Phosphatizing
and Etching
1
5
10
20
50
100
250
4
9
- 19
- 49
- 99
- 249
and over
Direct
24.8%
20.9
16.9
17.3
13.4
12.0
13.4
Municipal
20.8%
19.0
15.5
16.2
12.6
11.3
12.6
Direct
19 . 1%
15.8
13.7
15.7
11.9
10.6
11.9
Municipal
15 . 8%
14.3
12.5
14.6
11.1
9.9
11.1
Source: Exhibits II-l, V-12, and V-13.
Note that there is a slight difference between municipal and
direct discharger treatment costs. The cost differential varies
from 0.7% to 6.7%, depending upon the size and process. These
factors have the same basic data relationships as Alternate A. The
upper bound of price increase factors by process segment and estab-
lishment size required to cover pollution control costs is
presented in Table VI-13.
-------
VI - 23
Table IV-13
Upper Bound - Price Increase Factors
(as a Percent of Sales) by Process Segment
and Establishment Size - Alternative B - 1977
Establishment Size
by Number of
Employees
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 and over
Cadmium
Direct
31.3%
25.4
19.6
19.6
15.6
14.0
15.6
Process
Plating
Municipal
26.4%
23.3
18.2
18.4
14.8
13.3
14.8
Segment
Anodizing and
Phojsphatizing
Direct
27.5%
21.5
16.5
16.8
12.8
11.4
12.8
Municipal
20 . 7%
19.3
15.1
15.7
12.0
10.7
12.0
Source: Exhibit II-l, V-12, V-13, V-14, and V-15.
Note that the upper bound estimate for Alternate B also
exhibits similar price increase data relationships to the upper
bound estimate for Alternate A.
MARKET PRICE
INCREASE - 1977
The price increases in Tables VI-10, VI-11, VI-12, and VI-13
can be utilized to develop an estimate of the market price increase
for each process segment. A market price increase was determined
by weighting the price change per establishment size by market
share for those establishments which have the lowest estimated
treatment costs and represent 8070 or more of industry capacity.
These were the establishments with 20 or more employees. ^ '
(3) Actual production cost data by plant is not available; there-
fore it is not possible to determine a set of low cost producers
with size categories. This method of estimating is consistent
with the demonstrated economies of scale indicated for larger
establishments and the treatment system economies of scale
which indicate that on average the larger firms have lowest
costs of doing business.
-------
VI - 24
(a) Market Price
Increase - 1977 -
Alternate A
The resulting market price increases associated with Alternate
A are summarized in Table VI-14 for each process segment.
Table VI-14
Estimated Market Price Increases as
a Percent of Sales -
Alternate A - 1977
Process Segment
Cadmium Plating
Precious Metal Plating
Anodizing
Pickling
Phosphatizing
Etching
Percent Price
Lower
Bound
13.9%
13.9
12.5
12.5
12.5
12.5
Increase
Upper
Bound
16.1%
13.9
13.5
12.5
13.5
12.5
Source: Exhibit 1-10, Tables VI-10 and VI-11.
From the table note that:
1. The price increases estimated for the market are about
12% to 14% for 1977 under Alternate A.
2. The market price increase typically varies a few
percentage points between process segments. The maximum dif-
ference in the market price increase between process segments is
3.6%.
3. The estimated market price increases of cadmium
platers are the largest percentage price increases.
4. Market price increases of precious metal plating,
pickling and etching establishments are equal for the lower
bound and upper bound estimates.
-------
VI - 25
(b) Market Price
Increase -
Alternate B
The market price increase associated with Alternate B is
determined by those groups, direct and municipal, which require the
lowest price increases and represent 80% of the industry capacity.
Because the large municipal and direct dischargers require the
smallest price increases they establish the market price. These
estimated market prices are presented below for each process segment
Table VI-15
Estimated Market Price Increase
Factors as a Percent of Sales -
Alternative B - 1977
Percent Price Increase
Lower Upper
Process Segment Bound Bound
Cadmium Plating 13.5% 15.8%
Precious Metal Plating 13.5 13.5
Anodizing 12.2 13.1
Pickling 12.2 12.2
Phosphatizing 12.2 13.1
Etching 12.2 12.2
Source: Exhibit I-10, Tables VI-12, and VI-13.
The range of market price increases for Alternate B in 1977
are on the same order of magnitude as Alternate A.
Note that the price increase factors for Alternative B have
the same basic data relationships as Alternative A.
PRICE FACTORS -
1983
This section presents the price increase factors required by
establishments in each size and process segment in order to recoup
-------
VI - 26
the annual costs for meeting the 1983 proposed Effluent Guidelines
The price increases are measured incrementally against the 1977
Alternate A price increase factors. There is a projected lower
and upper bound of treatment costs depending on whether or not
establishments have secondary metal finishing operations.
(a) Price Increase Factors
Associated with the
1983 Proposed Effluent
Guidelines - Lower Bound
Estimates
The lower bound of price increase factors by process segment
and establishment size required to cover the anticipated 1983
pollution control costs is presented in Table VI-16.
Table VI-16
Lower Bound - Price Increase Factors
by Process Segment and
Establishment Size - 1983
(as a Percent of Sales)
Establishment Size Cadmium Plating Anodizing, Pickling,
by Number of and Precious Phosphatizing
Employees Metal Plating and Etching
1-4 19.970 16.4?0
5 - 9 18.0 13.6
10 - 19 14.5 11.9
20-49 14.9 13.5
50 - 99 11.4 10.2
100 - 249 10.2 9.1
250 and over 11.4 10.2
Source: Table V-15 and Exhibit II-l.
From the table note that:
1. Price increases are highest for the small metal
finishing establishments regardless of process.
-------
VI - 27
2. Price increases are higher for the cadmium and
precious metal plating establishments than for other metal finish-
ing processes.
3. The required price change as a percent of sales
decreases with increased size. Therefore, the price differential
between large and small establishments is significant.
4. The variation between process segments in the price
increase factors for plants above 10 employees is less than that
for the complete size range including the smaller establishments.
(b) Price Increase Factors
Associated with 1983
Proposed Effluent Guidelines -
Upper Bound Estimates
The upper bound of price increase factors by process segment
and establishment size required to cover the anticipated 1983
pollution control costs is presented in Table VI-17.
Table VI-17
Upper Bound - Price Increases by
Process Segment and
Establishment Size - 1983
Establishment
Size by Number
of Employees
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 and over
Source: Table V-15 and Exhibit II-l.
(as
Cadmium
Plating
27.0%
21.8
16.9
16.8
13.4
12.1
l3.5>
a Percent of Sales)
Process Segment
Precious
Metal
Plating
19.9%
18.0
14.5
14.9
11.4
10.2
11.4
Anodizing
and
Phosphatizing
23.7%
18.4
14.1
14.5
11.1
9.9
11.0
Etching
and
Pickling
16.4%
13.6
11.9
13.5
10.2
9.1
10.2
-------
It should be noted from the table that:
1. The highest required price change increases are
associated with cadmium plating establishments. Anodizing and
phosphatizing establishments require the second highest price
increase.
2. There is no change in the required price increases
from the lower bound estimates for precious metal plating, pickling
and etching establishments.
3. The required price change decreases with increased
size as was exhibited by the 1977 costs.
MARKET PRICE
INCREASE - 1983
The 1977 pretreatment standard for municipal dischargers will
not be changed in 1983. Therefore the market price increases re-
quired by establishments in order to recoup the annual costs for
meeting the 1983 proposed effluent guidelines apply to direct
dischargers only.
Approximately 77% of the metal finishing plants are municipal
dischargers and 23% are direct dischargers (as discussed in Section
II). By 1983 municipal dischargers will represent 80% or more of
the industry capacity due to the following factors.
1. As plant size increases, the percentage contribution
to total industry capacity increases. Many larger plants are or
will become municipal dischargers before 1983 to avoid high cost
treatment requirements.
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VI - 29
2. Some direct dischargers will go on municipal systems
as a method of meeting the 1983 standards. This will increase
the percentage of municipal dischargers.
On this basis, the municipal dischargers will collectively
have enough capacity to set the market price based on their cost
levels. No market price increases over those required to meet the
1977 standards will be necessary for municipal dischargers to
recoup the annual costs for meeting pretreatment standards in 1983
since it is unchanged from the 1977 level.(4) Therefore, the 1983
market price will be that arrived at for the 1977 standards as
presented in Table VI-14.
ELASTICITY
OF DEMAND
The impact on industry volume of increased prices depends
on the price elasticity of demand for metal finishing services.
Most price increases will reduce the demand for a commodity, but
the magnitude of the change is directly related to the demand
characteristics associated with the particular commodity or service.
There are no published estimates of the price elasticity of demand
for metal finishing services nor is there any data base available
from which an empirical estimate can be readily generated.
(4) Kearney's industry analysis indicates that municipal
wastewater treatment systems will raise the discharge
fees due to increased usage. Assessing the magnitude
of this increase was not within the scope of this
survey. However, the cost of these services will
increase and therefore the market price increases set
by municipal dischargers should be viewed as the most
conservative estimate.
-------
VI - 30
An order of magnitude estimate of the price elasticity of
demand for metal finishing services can be developed by evaluating
substitutes, import competition, customer in-plant substitution,
and past industry conditions.
1. Substitutes. Viable substitutes for metal finishing
services are not widely utilized or recognized at the present
time. Even substantial price increases would not appear to make
the substitution of alternatives feasible. Because many metal
finishes impart special surface characteristics which protect and
maintain the finished product, there are no known alternatives
which duplicate this service at twice the cost for most applica-
tions. Therefore, demand for metal finishing services would not
be affected by substitute competition.
2. Import Competition. Import competition, as previously
discussed in this section, exists primarily for small finished
products. Currently domestic products, such as screws and fasteners,
are priced 5% to 10% below imported products. The finishing opera-
tion accounts for 40% to 60% of the production cost of such items.
Metal finishing production costs are an important factor in import
competition of finished products. Because the quality of imported
products is comparable to that of domestic products, the demand
for these finished products must be determined solely on price.
If the price differential is eliminated between domestic and
imported finished products, the demand for domestic finishing
services related to screws and fasteners will be reduced signifi-
cantly.
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VI - 31
The metal finishing operation accounts for less than 5% of the
production cost of other products, such as those manufactured in
the appliance and electronics industries. Most domestic products
are priced at or below imported products at similar quality levels.
The price increases in these products due to the increased cost of
metal finishing services will not be sufficient to make customers
switch to imports. Therefore, the demand for metal finishing
services will not change due to imports of this category of metal
finished product.
3. Customer In-Plant Substitution. Customer options
which affect demand for metal finishing services in the market-
place include the installation of in-plant metal finishing services.
This action would reduce the market demand for metal finishing
services.
Larger plants, which require a high volume of finishing
services, may decide the incremental cost of purchasing metal
finishing services is greater than the cost of installation and
operation of in-plant metal finishing. In-plant substitution is
mostly likely to occur in plants where waste streams are similar
to those generated from metal finishing operations. In this case
the pollution control costs would be minimal for adding metal
finishing pollution control capabilities.
4. Past Industry Conditions. Kearney's industry survey
did not identify any major substitute technology which is a poten-
tial threat if cost relationships change. In addition, no examples
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VI - 32
of significant loss of market volume due to industry price increases
in the past were identified.
Since the only significant reduction in demand can be attri-
buted to import competition and in-plant installation of metal
finishing, the market can be considered very inelastic for price
increases within the range expected of up to 45%. Based on the
qualitative information available, Kearney estimates a range for
the price elasticity of demand of -.3 to -.1. The midpoint of this
range will be used to determine the impact on industry volume
of the estimated market price increases.
SUMMARY
The metal finishing industry is competitive. However, there
are variations in specific prices due to geographical production,
specialized process factors, and imperfect information on market
conditions. Establishment owners utilize labor, equipment, or
area plated costing techniques to approximate competitive cost
conditions in developing prices. Factors such as quality schedule,
delivery service and capacity also are important in establishing
individual transaction prices.
Pollution control expenses will increase the operating costs
incurred by the metal finishing establishment. Necessary increases
to co^'er these additional costs are projected for each process
segment in 1977 under Alternates A and B, and for each process
segment in ^983. I.; adillr.'.o: , lo-^er and upper bound price increas-"
-------
33
estimates are calculated to designate a range QJ 'osts bt-'Wfer
those establishments which have and those which ex not huc-e secon
dary metal finishing operations. The required pr • ce increase-
factors are also estimated for each establishment size by p
The analyses of required price inc." ir;er- f :ov-; ,-lant altuvuacivf--; ar--"1.
limited, (ho .'.eriand was consider? 1 very ir-^lastic. The P-; t ' m,
range of demand elasticity of metal finish ln^ s. Tvic.es ir -0
-O.i. The midpoint of this range is -0.2 and w~. L.'. ^c used -o
develop rii'" -'cimater- of 1977 and 198') v./lurne i.-T.vjc;
-------
VI - 34
C - ECONOMIC IMPACT
INTRODUCTION
The purpose of this section is to present a quantitative
analyses of the economic impacts associated with the proposed
1977 and 1983 effluent guidelines on the metal finishing in-
dustry. The specific areas of economic impact which will be
analyzed are the following:
Volume Impact
Operational Impacts
Customers and Suppliers
Capital Investment and Financing
Micro Impacts
Closure Analysis
Closure Estimates
Total Annual Costs
Other Impacts
It has been assumed that pretreatment costs for plants dis-
charging into municipal systems will be the same in 1983 as in
1977. Currently, no EPA decision has been made to make pre-
treatment standards more strict in 1983 (i.e., similar to BAT).
VOLUME
IMPACT
(a) Purpose
The purpose of this section is to analyze the impact of
the proposed effluent guidelines on the industry volume of
metal finishing services. The adjustment of industry volume
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VI - 35
is a critical impact since it becomes reflected in other im-
pacts such as manufacturing operations, employment, possible
plant closures, and effects transmitted to metal finishing
supplier industries.
(b) Volume Impact
Analysis
Framework
There are no established standard units of production in
the metal finishing industry. Thus, the dollar value of ship-
ments represent the best approximation of real units of metal
finishing services. Price increases due to pollution control
costs will inflate the anticipated 1977 and 1983 value of ship-
ments. Therefore, to eliminate this effect the value of ship-
ments will be analyzed in the context of constant 1973 dollars.
This will be accomplished by calculating the percent reduction
in industry volume and applying this to the baseline forecast,
thereby estimating the reduction in 1973 dollars due to the
pollution control costs. A reduction in demand will imply a
reduction of 1977 and 1983 real shipments, although the nominal
value of industry shipments will rise because of anticipated
price increases due to pollution control.
(c) 1977 Volume
Impact
The economic parameters used to calculate the 1977 estimate
of volume impact are the estimated 1977 price increases due to
-------
• pro ,'Oseu tl'flv.. nt ,-, • I'Lir-.s, chc irud-poi ••: est m6.ce of
>-- - i.co elasticity of ->,..;: ,nd -.-he ii-77 baseline- f.or-. cai.t volume.
)' - 1 ... •"' volurrie i^ •; :f J '-.'red by a 1973 p.- f.oe
Exhibit VI- 7 pre.sanfit, the volume ^mpact estimate for each
pi,-.-ee:-:s segment: ;y extent of " taLlishmenf divers i fi nation ^) for
A .ternative A. The 1977 volume reduction results in a reduced
rate - ' growth Lor th- industry c,x/er ^he period lc'b"73-1977 . The
reduce Ions in volume estimated are sumnarizec in Liae table be] 0x7:
Estimated Reduct ,.as FrO'Ti Baseline
Forecast Due to 1977 Alternative A
Guide] ; ne Lirai t at ions
Annua 1 F e r c e • .• t
Reduecion in 19 7 / Volume
Volume R e du c t i on(1)
of Dollars)
Lower Upper Lower Upper
Process S€tgtn(jnt___ Bound Bound. l£uji^. ^°' "'-r'
Cadmium Plating 2.9% 3.3% $1.4 $ 1.6
Precious Metal Plating 2.8 2.8 2.1 2.1
Anodizing '2.5 2.7 4.5 4.8
Pickling 2.5 2.5 2.0 2.0
Phosphatizing 2.7 3.2 0.6 0.7
Etching 2.5 2.5 2.9 2^9
Total 2.6% 2,7% $J-JL-5 $1A:J,
Note: (1) 1973 dollars.
Source: Exhibit VI-7.
Note that the total reduction in dollar volume resulting
t rt-'p the adoption of effluent , ,uit:elir' 5 asso-'1. Lar.; >t i .. tb
Reilectir'g lower .-.n.l uppf-r I ound
-or treating wistos as dj^.cu ;;ed
r
-------
VI - 37
Alternative A ranges from $13.5 million to $14.1 million. The
total dollar volume reduction ranges from 2.570 to 2.7% of the
baseline forecast. Since the baseline forecast indicates an
increase of 2170 from 1973 to 1977, industry growth is reduced,
but there is not a decline from present levels. The annual per-
cent reduction will apply to all future years. Due to increases
in the baseline volume the reduction in actual volume from base-
line will be larger in the years beyond 1977. Exhibit VI-9 shows
the incremental decrease associated with this growth in 1983.
The largest percentage reduction occurs in cadmium plating. The
smallest percentage reduction occurs in anodizing, pickling and
etching.
The dollar volume reduction associated with Alternate B due
to the price increases anticipated to result from the 1977 pro-
posed effluent guidelines, is presented in Exhibit VI-8 and
summarized on the following page.
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VI - 38
Table VI-19
Estimated Reductions From Baseline
Forecast Due to 1977 Alternate B
Effluent Guideline Limitations
Annual Percent
Process Segment
Cadmium Plating
Precious Metal Plating
Anodizing
Pickling
Phosphatizing
Etching
Total
Reduction
Volume
Lower
Bound
2.6%
2.7
2.5
2.5
2.3
2.4
2.5%
in
Upper
Bound
3.3%
2.7
2.6
2.5
2.7
2.4
2.6%
1977 Volume
Reduction (1)
(Millions of Dollars
Lower Upper
Bound Bound
$ 1.3 $ 1.6
2.0 2.0
4.4 4.7
2.0 2.0
.0.5 0.6
2.8 2.8
$13.0 $13.7
Note: (1) 1973 dollars.
Source: Exhibit VI-8
Note that the total reduction in dollar volume resulting
from the adoption of effluent guidelines associated with Alter-
nate B ranges from $13.0 million to $13.7 million. The total
dollar volume reduction ranges from 2.5% to 2.6% of the baseline
forecast. The data relationships have a similar pattern to
Alternate A. The rate of growth of industry volume is reduced
but volume is still significantly above current levels.
(d) 1983 Volume
Impact
There is no new impact on total market volume estimated for
1983 because the overall market price for 1983 is not estimated
-------
VI - 39
to change significantly. Exhibit VI-9 summarizes the 1983
market volume as impacted by the 1977 price increases which
still prevail.
(e) Summary
Through using estimated price increases and the estimated
price elasticity of demand for metal finishing services, the im-
pact on industry dollar volume has been calculated. The impact
on industry dollar volume is relatively low in 1977 at under 3.570
for all process segments, effluent discharge points and extent
of diversification cases. The further impact on industry dollar
volume is negligible in 1983 amounting to an increase over 1977
of about .6%. In no case is industry volume reduced below present
levels of production.
OPERATIONAL
IMPACTS
Economic impact assessment is not limited to the more ob-
vious market price and financial impacts of pollution control on
industry establishments. Consideration must also be given to
the impacts of introducing new technologies into the industry.
Pollution controls are not only new to the industry but klso do
not provide any net cost savings to the industry. Therefore,
industry efforts have not been focused on changing the opera-
tional characteristics of industry establishments or developing
(6) The reasons for this pricing estimate have been developed
previously in Section VI-B.
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VI - 40
manpower resources which w: 11 be required to install and operate
metal finishing establishments with the control technologies.
These impacts will be reviewed in this section.
(a) Types of Equipment
and Applications
Engineering Impacts
In Section IV, descriptions were provided for typical process
flows in metal finishing establishments. Equipment typically
employed in these processes are tanks, valves, generators and/or
rectifiers and hoisting equipment.
The majority of this line of equipment is simple in design.
Existing industry application engineering capabilities have
been well established. As newer process technologies have been
developed, e.g., automatic plating machines, rectifiers in place
of generators or new chemical compounds for plating or metal fin-
ishing, application changes were gradual in this industry. This
provided opportunities for manpower skills to develop in the
industry to adopt the new changes which were desired by firm
management.
Equipment which will be required to meet the proposed pol-
lution control regulations will require knowledge of water treat-
ment which is a new technology for metal finishing plants. Cost
of making these technology changes will also be considerably
higher than has been experienced in most establishments.
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VI - 41
The cost of major pieces of water treatment equipment i.e-
quired for BPT (clarifiers, sulfonators, chiorAnators and evapo-
rators) and BAT (BPT equipment and reverse osmosis) standards ior
a 10 and 47 employe establishment are summarised in Table /I-20
below.
Table VI-20
Cost of Major Pollution Control Equipment
for Selected Size Metal Finishing Establishments
Cost by Size of Establishments
Equipment 10 Employees 47 Employees
Clarifier $19,100 - $22,400 $ 47,100 - $50,600
Sulfonator 3,550 3,550
Chlorinator 3,550 3,550
Evaporator - 146,000
Reverse Osmosis Unit 8,000 150,000 or more
Source: Battclle Columbus Laboratories.
Major operafonil impacts associated with this equipment
include:
1. Each equipment type is new to most industry estab-
lishments, particularly, snail metal finishing shops of less
than 50 employees. Employees and supervisors will have to be
trained in the operation and maintenance of ecuipment embodying
unfamiliar technology.
2. Energy requirements will change. The evaporator,
for example, requires steau or other heat generating power which
few metal finishing establishments have outside of their space
heating equipment which would be insufficient for this purpose.
New sources of en^r^y will be required.
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VI - 42
3. Leaders in the industry, forging ahead and install-
ing the newer technologies could be confronted with impacts if
unproven technologies require replacement or additional costs
to make them operational. Reverse osmosis units have yet to be
proven successful in treating wastes other than nickel; however,
reverse osmosis or other technologies are expected to improve
or emerge prior to 1983 when zero discharge is to be the stan-
dard.
4. Establishments which do not have the engineering
capabilities to install, modify, if required, and maintain the
BPT or BAT equipment, will require outside applications engineer-
ing and training assistance. They also may be confronted with
regulatory impacts from not meeting the standards on a consistent
basis.
(b) Supplies, Operating
and Maintenance
Cost Impacts
Annual operating costs for metal finishing establishments
were discussed in Section IV. Among others, annual costs in-
cluded labor, supplies and maintenance costs.
Labor requirements to operate and maintain pollution control
equipment were estimated to range from one quarter man year in
the smallest establishment to fifteen in the largest establish-
ment. One of the problems many establishments identified in
interviews as critical was an inability of the industry to at-
tract and maintain technically competent manpower resources. As
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VI - 43
operations in metal finishing establishments become more sophis-
ticated, this labor constraint will become more critical to many
establishments.
In the smaller metal finishing shops, the owners typically
perform maintenance and other technical work, in addition to
performing process operations and supervising other personnel.
These establishments could develop problems resulting from
inattention to customer related activities and other managerial
concerns, if required to devote as much as one quarter man year
of effort to pollution control. In larger establishments this
may not be quite as serious a problem because labor becomes more
specialized in these plants.
(c) Space and Process
Line Rearrangement
Impact
Battelle Columbus Laboratories estimated the costs of space
requirements to install equipment necessary to meet the BAT re-
quirements for a 38 employee establishment. The table shown on
the following page summarizes these estimates.
-------
V.f - 44
Table VT-?.l
EG • inv; ;-e u :' Space Requirements for
-ion Control Equipmqnt
Space
Urban
(Municipal
Discharger)
2,800
870
400
600
4,670
i
Required (Ft. '""I
Rural
(Direct
Discharger)
2,800
370
400
600
600
5,270
Type of Area
Large Equipment
Reaction and Feed Tanks
Laboratory Space
Outside Sump Area
Lagoon Are;1
Total Square Feet
Source: Battelle Columbus Laboratories.
In the table, large equipment includes clarifiers, centrifuges,
?hlorinators and sulfonators. Inside space requirements amount
10 4,070 square feet and outside space requirements amount to 600
and 1,200 square feet for urban and rural plants respectively.
In Kearney's survey of the industry, municipal establish-
ments were located in crowded metropolitan areas. Operations in
upper floors of warehouses and other industrial locations where
additional space is not available were not uncommon. It is diffi-
cult to determine precisely how many metal finishing establish-
ments fall into this group. However, it is conservatively es-
^.imated that .70% to - 0% of the municipal establishments may oper-
ate under , space constraint. Management in these establishments
indicaf• <*• r' ,t proces:1 space was at a premium vnich wvald leave
r linos t no cpac0 for privation control equipment.
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VI - 45
Those metal finishing establishments witliout available ex-
pansion room, could be further impacted because of relocation
requirements co meet proposed regulations. A secondary impact
of relocation would ue that the new site was identified as a new
source requiring mo^e stringent standards. In addition, a large
amount of equipment (piping, tanks, and sewer lines) in existing
metal finishing establishments cannot be dismantled and reused
in new locations. This alone would constitute an entirely new
set of costs for those establishments required to relocate to
meet proposed regulations.
Process lines in existing metal finishing establishments
rarely are arranged for optimal use of waste water treatment
systems. While acid streams may be separated from cyanide streams
(to avoid releasing cyanide gases into the plant atmosphere if
cyanide streams are accidentally mixed with acid streams) other
segregated streams normally do not exist. To minimize the
amount of treatment equipment and associated costs, it would be
desirable in many plants to rearrange the processes so commonly
treated streams can be merged. Depending on the extent of rear-
rangement, overall costs for this may be equal to or greater than
pollution control costs, if business disruption costs are also
considered. In situations where it is necessary to rearrange
process flows, establishments could be faced with temporary or
permanent loss of business during shutdown of specific processes
to make the changes.
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VI - 46
(d) Operational
Effects on
Employment
In determining overall employment impact, it is necessary
to determine to what extent new employment opportunities will
be generated in the industry as a result of pollution control.
In paragraph (c) above there was a discussion of the amount of
labor required to maintain and operate pollution control equip-
ment. Not only will changes occur in types of manpower re-
sources required in the industry, but the absolute number of
persons required in the industry will increase as control tech-
nology is installed. The table below shows the-numbers of
additional employees which industry establishments will re-
quire to operate the pollution equipment
Table VI-22
Employment Increases Required for
Pollution Control - BPT
Size of Establishment
(Number of Employees)
1 -
5 -
10 -
20 -
50 -
4
9
19
49
99
100 - 249
250 or Over
Total
Number of
Establish-
ments
328
140
193
209
57
27
6
960
Additional
Employees per
Establishment
(Man-Years)
.25
.75
1.50
2.00
2.87
6.00
15.00
Total In-
increase-all
Establish-
ments
82
105
290
418
164
162
90
1,311
Sources: Battelle Columbus Laboratories and Kearney estimates.
Exhibit I-10,
-------
VI - 47
The estimates in Table VI-22 are based on the number of
establishments in the baseline forecast for 1977 at which time
the effluent limitations will be effective. The addition of em-
ployees required in each establishment is based on estimates pro-
vided by Batelle Columbus Laboratories.
The relationship shows diseconomies in labor use for small
size establishments. Thus, if the size distribution of establish-
ments is impacted by closures, the total increase in employment
will be somewhat lower. The changes in employment for all types
of metal finishing establishments including closure impacts will
be discussed later in this section.
CUSTOMERS AND
SUPPLIERS
Impacts on customers and suppliers will occur because of
changed market conditions and adjustments required in metal
finishing industry operations. These impacts will be transferred
to the buying markets and metal finishing industry suppliers.
(a) Impacts on
Customers
The primary impact on metal finishing customers will be the
higher price charged for metal finishing services. Metal finish-
ing generally represents a small portion of a customer's final
product cost. On this basis, the major portion of metal finish-
ing customers can be expected to accept metal finishing price
increases and pass their increased costs on to their customers.
-------
VI -
However, some customers might cor c'uct a cost anal /sis and deter-
mine that long run economies dictate that the least cost solution
would be to install their own metal finishing operation. This
will most likely occur in instances where cus comers are faced
with pollution control requirements from other present in-plant
processes which utilize similar or identical equipment. A small
portion of metal finishing customers may seek out substitute
methods, discontinue the use of metal finishing services on cer-
tain products, or discontinue product lines requiring metal finish-
ing services. These instances will be negligible for the reasons
presented in the elasticity discussion in Section VI-B.
The proposed effluent guidelines will cause metal finishing
establishments to discontinue secondary operations and specialize.
Metal finishing operations with wastes compatible with existing
waste streams may be added but the marginal costs of incompatible
wastes will discourage the maintenance of such operations. This
will result in difficulty in obtaining certain metal finishing
services and a further increase in the price of these services.
There will also be a reduction in the number of metal finishing
establishments. A reduction in the number of establishments will
result in customer problems in obtaining metal finishing services.
These trends are discussed in detail in subsequent sections of
this report.
(b) Impacts on
_ Suppliers
TLie pro-osed effluent gui-~ilnes vail not impose an impact
-------
VI - 49
on suppliers of raetaj finishin0 i -«.> materials. Uu.-pliers of
standard metal finishing prices > cq-. pment will ri»= b. adveroely
affected by the doption of the proposed effluent f,ui;i lines
The proposed effluent guideline b will produce an increase
in demand for polluti .';n control equipment. This demand should
be analyzed in torms of the years in which the proposed effl..-
ent guidelines are scheduled to tak;~ effect.
1. Effluent Guidelines Proposed for 1977. All capital
equipment is in short supply at the present time. Pollution con-
trol equipment shortages are even more acute. Many manufacturers
of pollution control equipment are currently booking orders for
delivery in 1976 and 1977. Delivery preference is often given
to large customers especially those who purchase a relatively
large quantity of many products in a capital equipment supplier's
product line. On this basis, metal finishing establishments,
particularly the small establishments, might not be able to ob-
tain the necessary pollution control equipment by 1977. This
will occur because:
(a) By the time the proposed effluent
guidelines take effect, pollution
control equipment manufacturers
will be Looking orders for delivery
after 19 ''.
..b) Most metaj. finishing establishments
wi 11 not be in a position to get a
preference in deliveries, as few
qualify as large customers.
The above conditions were verified ty several manu-
facturers .
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VI - 50
Additionally, if shortages occur in capital equipment
markets, manufacturers will give preference to those customers
with strong financial positions. The justification for this
is usually the minimization of bad debts.
Many manufacturers use a shortage market as an oppor-
tunity to increase prices. This is especially true when prices
have been depressed for an extended time period due to oversupply
caused by general economic conditions, as is the case in the pol-
lution control equipment market. However, all major price ad-
justments will probably have been made prior to 1977.
The practice of taking long-term future orders with an
open price increase clause is becoming more widespread among
capital equipment manufacturers. A shortage market allows manu-
facturers to dictate this as part of the purchase agreement.
This clause will probably be incorporated into the majority of
pollution control equipment contracts written in the foreseeable
future. Open ended future pricing may make it more difficult for
small shops to arrange required financing to support a firm con-
tractual order.
All of the above factors will have a bearing on the
availability of pollution control equipment to metal finishing
establishments in 1977. These factors tend to put the small es-
tablishments at a further disadvantage.
2. Effluent Guidelines Proposed for 1983. An eight
year lead time will be sufficient for necessary adjustments to
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VI - 51
be made in the pollution control equipment industry to eliminate
equipment shortages. However, the small establishments will
still be at a disadvantage because of higher prices and pref-
erences given to larger establishments.
CAPITAL INVESTMENT
AND FINANCING
The need to finance pollution control investments may re-
sult in adverse affects on the metal finishing industry. The
funds required for pollution control investment are substan-
tially higher than the current average annual expenditure. This
abrupt adjustment of financing patterns may create difficulties
in funding. Table VI-23 compares the pollution control invest-
ment requirements of Alternate A for 1977 and 1983 with 1967
levels of capital expenditures adjusted to 1973 dollars.
-------
VI
Table VI-23
Pollution Control Capital Investment
Requirements for the Metal Finishing Industry
Establishment
Size by
Number of
Employees
1967
Capital
Expenditure(1)
1977
Capital
Expenditure(2)
1983
Capital
Expenditure(3)
1- 4
5- 9
10- 19
20- 49
50- 99
100-249
250-499
(Millions)
$ 0.14
0.64
2.08
3.68
2.77
4.19
1.12
(Millions)
$ 13.62 •
8.73
11.28
52.88
20.34
21.10
11.40
(Millions)
$ 2.69
1.72
2.23
10.45
4.02
4.16
2.25
Total
Notes: (1)
(2)
(3)
$14.62
$130.62
$27.53
1967 values have been adjusted to 1973 dollars
using a 1.26 inflation factor.
For both direct and municipal dischargers.
1983 expenditures for direct dischargers only
represent additional costs above 1977 require-
ments and are obtained by multiplying 1977
values by 0.859 and 0.23.
Sources: U.S. Census of Manufacturers, 1967.
Exhibits V-8, V-9, V-10, and V-ll.
From the table note that:
1. The 1977 and 1983 capital expenditures of the
smaller establishments will vary significantly from 1967 patterns
The 1 to 4 employee establishment category must increase invest-
ment spending 100 times above the average.
2. Establishment classes over 5 employees in size will
need five to ten times their present expenditure level to cover
the pollution control investment costs of 1977 and 1983.
3. The total industry will require approximately ten
times the 1967 level of investment for 1977 and 1983 requirements
-------
VI - 53
4. The 20-49 man establishment has the largest ex-
penditures. This in part reflects the use of $146,000 evapora-
tion unit beginning with this size establishment.
In addition to total industry investment the average capital
expenditure per establishment will significantly increase. Uti-
lizing a weighted average by process type, the average 1977 and
1983 capital investment by establishment size was developed. In
Table VI-24 below, these results are compared to 1967 capital ex-
penditure levels of establishments.
Table VI-24
Average Capital Expenditure Requirements
by Metal Finishing Establishments(1)
Establishment Average Average Average
Size by 1967 1977 1983
Number of Capital Capital Capital
Employees Expenditure (2) Expenditure (3) Expenditure (4)
1- 4
5- 9
10- 19
20- 49
50- 99
100-249
250-499
Notes: (1)
(2)
(3)
(4)
$ 470 $ 36,210 $ 31,110
3,500 52,265 44,900
21,420 69,200 59,440
16,760 309,200 265,600
69,300 442,190 379,840
235,620 916,520 787,290
667,800 2,293,920 1,970,480
All values are in 1973 dollars.
1967 values have been adjusted from Exhibit II- 3
using a 1.26 factor.
Includes both direct and municipal dischargers .
1983 values are for direct dischargers. These
are incremental costs in addition to 1977 and
are obtained by using a .859 factor.
Sources: Exhibit II-3, V-8, V-9, V-10, and V-ll.
Note from the table that:
1. The most significant increase in capital expenditure
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VI -54
will be the 1 to 4 employee establishment which will require
approximately 100 times the present levels for both 1977 and
1983.
2. A substantial increase in investment is required
for the 20 to 49 employee establishment compared to the needs
of other size classes. A 20 fold increase is needed for this
group while other sizes require only 4 to 5 times their present
level. Again, this reflects the introduction of a costly evapo-
rator unit at this size establishment.
Because of the large investment required above current
levels, the industry will have to establish new relationships with
financing sources. This will require managerial effort and the
ability to meet institutional requirements for financial and
planning information. While arranging for financing may require
extensive managerial effort, those firms with a demonstrated
capability of retiring debt will be able to obtain financing
under most money market conditions. However, when extremely
tight conditions on loans exist, most sources of funds will
refuse new customers. If this situation occurs when the metal
finishing industry requires financing for pollution control
investments then firms which might ordinarily receive financing
will be unable to do so. However, there is no indication that
the metal finishing industry will be impacted worse by tight
money conditions than other similarly structured industries.
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VI - 55
An alternative to debt financing is that of equity financ-
ing. Those establishment owners who have accumulated sufficient
savings may decide to invest these reserves in pollution control
equipment. During the Kearney survey there were indications that
this source of financing does exist but only a few establishment
owners would be capable and willing to utilize this technique.
The small establishment owners will be disadvantaged in the
effort to secure financing because of the low value of collateral
represented by current equipment assets and the lack of signifi-
cant financing experience. In a small operation the owner must
meet the institutional criteria for investment, such as age and
health, because the success and profitability of establishment
depends directly on his abilities. Hence, a small establishment
relies on future profits and the ability to retire a debt as
well as the business and personal credit standing of the owner.
Financing of investments has been built into the closure
analysis, which is discussed under the subject heading, Closure
Model. Economies of scale in financing is discussed under the
next subject heading.
MICRO -
IMPACTS
(a) Purpose
The purpose of this section is to analyze the individual
impacts which reflect the set of adjustments which are particular
to a firm or set of firms. The metal finishing industry is made
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VI - 56
up of numerous relatively small establishments. Therefore, it
is not possible to examine potential individual impacts on a
firm by firm basis. The analysis under this subject heading
addresses itself to the individual impacts which will arise among
major classifications of firms. This is not to say, however,
that specific, individual firms cannot be found who face costly
adjustments to the guidelines because of space constraints, size
or other factors.
This section considers individual impacts in terms of econ-
omies of scale in pollution abatement, economies of process
specialization, and economies of size in financing.
(b) Economies of Scale
in Pollution
Aba toment
The technical and cost information developed by Battelle
Columbus Laboratories indicates that there are definite econ-
omies of size in pollution abatement. There are diseconomies
for small size firms which arise from the minimum size treatment
system which can be made available under present technology.
These economies will impact the metal finishing industry in two
ways .
1. Kstablishments subject to severe diseconomies may
close. This factor is utilized in the closure model developed
under the next subject heading.
2. Trends will be established in which the market
share of the firms in size classes with favorable economies of
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VI - 57
scale will grow over time in relation to the firms in the rela-
tively disadvantaged size classes. This is a continuation of
the past trends which have been documented for this industry.
The effect of current economies of scale in the metal finish-
ing industry can be shown by examining the market share by firm
size over time as shown in Table VI-25 below.
Table VI-25
Market Share Trends in the
Metal Finishing Industry
Establishment
Size by Number Market Share as Percent
of Employees Value Added
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 - 499
Total
Source: Census of Manufactures, 1958, 1963 and 1967.
From the market share data in the above table it can be seen
that small firms are currently subject to diseconomies of scale
and large firms have been favored with economies of scale. These
economies relate to the complete operations of the establishment
not solely to production.
The price increase factors calculated as a percent of sales
in Section VI-B are indicative of the scale economies which will
1958
7.3%
9.8
16.9
30.4
19.6
13.1
2.9
100.0%
1963
5.0%
8.2
16.6
30.1
21.6
12.8
5.2
100 . 0%
1967
4.6%
7.0
13.1
30.8
20.2
17.7
6.6
100 . 0%
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VI -58
be introduced into the metal finishing industry by the require-
ments for pollution abatement. These price increase factors
are presented by establishment size, industry process segment,
and pollution abatement treatment system in Tables VI-10 through
VI-17. The data in these Tables indicate that the establishment
sizes in the 1-4 and 5-9 employee groups are subject to signifi-
cant diseconomies of scale. The establishments sizes above 50
employees have economies of scale in relation to those establish-
ments in the 10-49 employee groups. These data indicate that the
large establishment group, with over 50 employees, has almost a
50% cost advantage over the 1-4 man establishments. The cost
advantage of the 50 and above employee establishments over the
10-49 employee establishments is not as significant, and, in
most cases, this advantage is less than 5% of total sales.
These economies of size with respect to pollution abatement
will result in closures of small shops. In addition, a trend
toward larger size firms will gain further impetus. It can be
expected that over the long run only firms servicing restricted
geographic market segments and those serving specialized market
segments will continue to be viable in the under 50-man estab-
lishment group. Nevertheless, due to the local nature of the
service area handled by metal finishing firms this may still be
a sizable number of firms. This group will be able to exist
because of the ability to charge price premiums above that re-
quired by the firms subject to strong economies of scale.
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VI - 59
(b) Economies of
Process
Specialization
The technical treatment systems technology and cost de-
scribed by Battelle Columbus Laboratories indicates that there
are economies to waste stream specialization in pollution abate-
ment cost. These economies arise because the treatment costs
for diversified waste streams is higher than those from estab-
lishments specializing in specific metal finishing processes.
The Battelle Columbus Laboratory treatment systems are de-
scribed in Section V and in more detail in Appendix D - Battelle
Columbus Laboratories Proposed Effluent Guidelines. These tech-
nologies have been designated A, B, C, and D. The annual cost
relationships are such that the cost ofA< B< C •£ D. The
waste streams required by the primary process segments are sum-
marized in Table VI-26 below.
Table VI-26
Type of Treatment Process by Level
of Service Diversification
Specialized Maximum (2)
to Primary Some Diver- Diversi-
Primary Process Process sification fication
Cadmium B N/A (1) c
Precious Metal
Plating B N/A (1) c
Anodizing A B D
Pickling A B D
Phosphatizing A B j)
Etching A B D
Note: (1) N/A means not applicable.
(2) Theoretical maximum diversification.
Sources: Exhibits VI-10 and VI-11.
-------
VI - 60
Note that the process treatment data indicate that the
high cost treatment systems are the result of the need to treat
multi-process waste streams.
Exhibit VI-10 indicates the incremental annual cost for
diversifying from a specialization in one of the six primary
processes to a capability to handle all types of process wastes
for a ten employee establishment. The incremental cost ranges
from 21.3% to 35.7% of the specialized process system annual
costs. A similar analysis for a 47 employee establishment is
shown in Exhibit VI-11. The incremental cost of diversification
ranges from 13.370 to 24.6% of the annual costs of establishments
specialized in the primary process.
In order to make diversification contribute fully to prof-
its, the sales of the diversified services must cover the incre-
mental cost of the treatment system required. Market price in-
creases due to the costs of pollution abatement are estimated
to range from 12.5%. to 16.170 in 1977. To justify the incremental
cost of diversification this price increase on the added sales
of diversified products must cover the added annual costs of
pollution control required. This suggests that the sales of
diversified products must be on the order of 2070 to 40% of total
sales to justify the added expenditure. Thus, it is estimated
that specialization in the metal finishing industry will grow,
since most existing establishments with a small percentage of
-------
VI - 61
diversified services will choose to specialize rather than incur
the additional pollution abatement costs.
(c) Economies of
Sale in
Financing
Institutionally, there are effective economies of size in
financing. This occurs in terms of both cost and availability
of funds.
A number of methods of financing involve legal and invest-
ment banker fees which can only be covered by a large financing
requirement. Pollution control bonds can be an attractive ap-
proach to financing investments in treatment system However,
the legal and underwriting costs are such that $500,000 is the
minimum needed to reasonably afford the fund raising costs and
a $1,000,000 or more is considered advisable. Equity financing
through public sale of stock, private placements of debt instru-
ments through investment banking houses and third party leasing
arrangements involve similar financing costs. These methods
will be generally unavailable to all but the largest establish-
ments in the metal finishing industry.
Generally the range of alternative methods and source of
financing increases with increased size establishments. Small
firms will be primarily limited to personal equity financing,
local banks, personal loan sources and equipment supplier
-------
VI - 62
arrangements. In the latter case, current suppliers in the
industry do not appear to have strong financing programs. Thus
the range of alternatives for small firms will be relatively
limited.
Generally, there are institutional considerations which
will also limit the ability of small firms to raise funds and
possibly the willingness of the owner to finance:
1. Debts will usually be obligations of both the
business and the owner even if incorporated.
2. Personal assets such as stock, savings accounts,
real estate, etc., may be required as partial security for the
loan.
3. Age and health may be a consideration if lack of
management indicates problems if the owner dies. Life insurance
securing the loan in the event of death may be required.
4. Limitations on owner income and minimum equity
investment and maximum debt/equity ratios are likely to be re-
quired as a condition of the loan unless otherwise secured.
The effective cost of financing is not specifically related
to size. Some small firms dealing with local banks may obtain
rates based on the current costs of money locally for the bank,
which can be under the prime rate. Large firms using major banks
may pay a premium over prime as they are not large enough to be
major banking clients.
-------
VI - 63
In summary, there are institutional economies of financing.
These relate to the range of alternatives and availability. It
is less apparent that there are consistent economies of size
in interest costs which are more dependent upon individual cir-
cumstances .
CLOSURE
ANALYSIS
Individual firms may be severely impacted by pollution con-
trol requirements. To assess this impact a model has been uti-
lized relating closures to earnings, financing, and price in-
creases. Within each establishment size category a financial
model for the "average" or typical establishment has been devel-
oped. Utilizing the model pro forma income statements and the
estimated market price increases, each establishment size and
process category has been analyzed with respect to the expected
pollution control costs. Low earnings size categories are ex-
pected to close. Financing capability is then reviewed on the
basis of cash flow versus amortization requirements. The firms
with marginal cash flow capability to finance pollution control
expenditures are expected to close.
(a) Model Income
Statements
Pollution control costs will increase the operating costs
and capital investment of each metal finishing firm. The sales
/
of each establishment size were adjusted by the estimated market
prices presented in Section VI-B. Income statements were
-------
VI - 64
revised to reflect the costs of pollution for these establish-
ments .
Income statements which include projected pollution control
costs for 1977 Alternate A and Alternate B and 1983 are presented
in Exhibits VI-12 through VI-29/7^ The profits of each treat-
ment alternative indicate that there will be reduced profits
associated with pollution control for smaller establishments.
To analyze the economic impact after pollution control costs
are in effect, the earnings of each establishment size category
are compared to the average long-term capital invested. A cal-
culation of the ratio of earnings before taxes and interest (EBIT)
in relation to the value of the long-terra debt and equity (includ-
ing pollution control investment) is estimated in Exhibits VI-30
through Vl-45. Those establishment sizes with a ratio of less
than .1 to 1 are estimated to close. These ratios are summarized
in Exhibits IV-46 through IV-49. Establishments which are candi-
dates for closure under 1977 Alternate A and Alternate B and 1983
can be identified from these exhibits.
1. Alternate A. A summary of the analysis of the ratio
of EBIT to long-term investment for metal finishing firms under
Alternate A conditions is shown in Table VI-27 on the following
page.
T7)The exhibits are organized by process plant type. As dis-
cussed in Section V, there is a lower and upper bound of
process plant types for each process segment which corre-
sponds to a lower and upper bound of pollution control costs.
(See Table IV--4 for the designation of the lower and upper
bounds of process plant types for each process segment.)
-------
Table VI-27
Summary of Calculated Earnings to Average Capital Ratios
(Alternate A - 1977)
Establishment
Size by Number
of Employees
1-4
5-9
10-19
20-49(1)
50-99
100-249
Lower Bound Cost Estimates
Anodizing,
Pickling,
Phosphatizing,
Etching
Cadmium
Precious Metal
Plating
.093
.090
.107
.160
.207
.157
Upper Bound Cost Estimates
,135
,169
,123
,240
,195
,158
Cadmium
Plating
.048
.050
.095
.220
.186
.160
recious
Metal
Plating
.093
.090
.107
.160
.207
.157
Anodizing,
Phosphatizing
.054
.068
.108
.230
.191
.140
Pickling,
Etching
.135
.169
.123
.240
.195
.158
Note: (1) Without evaporator costs.
Source: Exhibit VT-46.
-------
VI - 66
Note that closures under Alternate A conditions for the
lower bound cost estimates include the 1 to 9 employee estab-
lishment size class of cadmium and precious metal plating. With
evaporator cost eliminated there will be no closures in the 20
/0\
to 49 employee size category.v ' Closures under the Alternate
A conditions for upper bound cost estimates include cadmium
plating, precious metal plating, anodizing and phosphatizing
establishments with less than 10 employees and the 10 to 19
employee cadmium plating establishments. Again with the evapo-
rator eliminated, there will be no closures in the 20 to 49
employee size category.*• '
2. Alternate B. Table VI-28, on the following page,
summarizes the KBIT ratio analysis under Alternate B conditions
reflecting a different level of costs for direct and municipal
dischargers.
(8) Closures will also occur in the 20 to 49 employee estab-
lishments for all processes when costs associated with
the use of an evaporator are included in the analysis.
-------
Table VI-28
Summary of Calculated Earnings to Average Capital Ratios
Alternate B - 1977
Establishment
Size by Number
of Employees
Direct Dischargers
1-4
5-9
10-19
20-49
50-99
100-249
Municipal
Dischargers
1-4
5-9
10-19
20-49(2)
50-99
100-249
Cadmium
Precious Metal
Plating
.089
.082
.098
.153
.183
.151
.127
.122
.135
.136
.200
.162
Anodizing,
Pickling,
Phosphatizing,
Etching
133
162
115
161
189
152
.180
.200
.180
.110
.208
.159
Cadmium
Plating
.044
.046
.089
.151
.180
.154
.078
.081
.119
.167
.197
.166
Precious
Metal
Plating
.089
.082
.098
.153
.183
.151
.127
.122
.135
.136
.200
.162
Anodizing,
Phosphatizing
.049
.061
.064
.152
.183
.152
.115
.110
.142
.108
.202
.165
Pickling,
Etching
.133
.162
.115
.161
.189
.152
.180
.200
.180
.110
.208
.159
Note: (1) Without evaporator costs,
(2) With evaporator costs.
Source: Exhibits VI-47 and Vl-48.
I
ON
-------
VI - 68
Note that there will be no closures among municipal dis-
chargers under the Alternate B conditions with the lower bound
cost estimates. Closures in the municipal discharger category
with the upper bound cost estimates will occur among the cadmium
plating 1 to 4 and 5 to 9 employee size establishments.
Closures in the direct discharger category with Alternate
B conditions and lower bound cost estimates will occur among
the cadmium plating 1 to 4, 5 to 9, and 10 to 19 employee size
categories. Closures in the direct discharger category with
upper bound cost estimates will occur among the cadmium plating
and precious metal plating, anodizing and phosphatiziag in the
1 to 4, 5 to 9, and 10 to 19 employee size establishments.
3. 1983 Closures. The 1983 proposed effluent guide-
lines will affect direct dischargers only. Municipal dischargers
are expected to continue to be required to meet the pretreatment
promulgated for 1977 in 1983. Since none of size categories
can meet .1 to 1 ratio criteria for EBIT on long-term invest-
ment, all employee size establishments of the direct discharger
category in all process segments will be candidates for closure
under both lower and upper bound cost estimates in 1983. The
analysis supporting this result is shown in Exhibits VI-49.
-------
VI - 69
(b) Evaluation of
Establishments
With Above Average
Profits
The foregoing closure evaluation was based on the charac-
terization of the "typical" establishment. However, within
each size category there is variation in firm performance and
market condition. The "typical" firm is not representative of
the complete range of performance. There are firms which are
more profitable than the average due to less intense competition
in geographical or specialized markets or due to low cost pro-
duction factors. These more profitable firms could receive a
price above the estimated market price for their services. To
analyze these establishments, the model income statements are
used with a price premium of 10% over the estimated market price.
On a judgmental basis, Kearney estimates this is the highest
overall price premium which could be typically expected to pre-
vail for any period of time in the metal finishing market due
to service specialization or geographic isolation. Establish-
ments in the above average profit group with a ratio of earn-
ings before interest and taxes of .1 to 1 or more are not es-
timated to have closures.
To analyze the establishments which can be considered more
profitable a normal distribution was utilized. The profit range
associated with the above average establishment is presented in
Table VI-29 on the following page.
-------
VI - 70
Table VI-29
Profit as a Percent of Sales Distribution
of Metal Finishing Industry Establishments
Establishment Size Profit as a Percent of Sales
by Number of Above Normal
Employees Mean Profit Standard Deviation Profits
1-4 8.3% 2.0% 10.3%
5-9 6.2 5.2 11.4
10 - 19 3.0 3.2 6.2
20-49 2.9 5.3 8.2
50-99 3.4 3.3 6.7
100-249 2.6 .8 3.4
250 - 499 2.6 .8 3.4
Sources: NAilF, 1972.
A. T. Kearney, 1974.
Firms having a service specialization or geographic isolation
are considered to be the significantly more profitable firms.
These are the only firms which will be in a position to attain
additional price increases. The number of significantly above
average profitable firms was calculated to be 1670 of the firms
in each size class and process group based on one standard devia-
tion from the mean and above. The number of significantly above
average profitable firms by process segment and size is identi-
fied in Table VI-30 below.
Table VI-30
Number of Significantly Above Average
Establishment Size
by Number of
Employees
1-4
5-9
10 - 19
20 - 49
50 - 99
Total
Cadmium
Plating
7
3
3
3
_1
17
Precious
Ketal
Plating
9
4
4
5
_1
23
Profitable
Anodizing
22
10
10
11
_3
56
Firms in the Metal Finishine Industry^ '
Pickling
5
2
2
2
_1
12
Phosphatizing
2
1
1
1
0
5
Etching
i_5
6
6
5
I
0-3
Total
60
26
26
27
7
146_
Source: Exhibit 1-6 and
167, factor.
-------
VI - 71
The analysis is based on firms falling into this group obtain-
ing a 10% price premium over the estimated market price. Earnings
and earnings to average capital ratios are summarized for these
firms in Exhibits VI-50, VI-51 and VI-52. These exhibits indicate
that none of the firms with substantially above average profits
will close in 1977 under either Alternative A or Alternative B and
that only the smaller firms will be candidates for closure under
the 1983 guidelines.
(c) Financing
Evaluation
A financing source will apply a highly individual criteria
to establishing credit requirements for small firms. Since small
firms sometimes attempt to minimize taxes by taking out investment
income as salary of owners, simple ratios alone do not show credit
worthiness. Financing sources will tend to examine both the busi-
ness and the owner's credit worthiness in evaluating the request
for a loan. Often the owner will be required to secure the debt
partially with personal assets. Usually both the business and the
owner will be required to be obligated for repayment.
As a minimum test of financial strength, cash flow will have
to be sufficient to retire the debt incurred. This can be express-
ed as shown on the following page.
-------
VI - 72
(EBT&I-T> u-V +D=DR
where: E
BT&I Earnings before interest and taxes
I: Interest on debts
TR: Rate of taxes on profit
D: Depreciation
DR: Debt retirement (principle)
The left hand side of the equation represents cash flow. The
requirement can also be expressed as a coverage ratio cash flow/
debt retirement. This ratio shows how well debt retirement is
covered by the cash flow projected.
This financing test has been applied to the ^ie :al finishing
industry. Cash flow requirements arising out of current balance
sheet items are assumed constant. Debt retirement is based on
amortization of the lean for pollution control equipment over five
years. This is in accord with the requirements of banks as sum-
marized in Section II. An accelerated tax write-off of five years
with a straight 1'ine depreciation method is used. Retirement of
current debt occurs at 1070 per year. Interest cost is set at 8%
on existing debt and 10% on the new treatment system investment.
One hundred percent of pollution abatement system costs are assumed
debt financed.
It is estimated that establishments not having earnings
before interest and taxes of at least 10% on long-term invest-
ment with a coverage ratio of less than 1.0 to 1 will not be
-------
VI - 73
able to finance the required pollution control investment- It
is likely that establishments meeting this criteria with a
coverage ratio in the range of 1.0 - 2.0 to 1 will be required
to provide collateral, a percentage of equity financing, or
undertake other steps to secure the loan. However, failure to
acquire financing will not be caused by the impact of pollution
control. Some owners may decide not to commit their personal
assets to meet financing requirements due to age or other per-
sonal reasons. Hence, they may sell or close their businesses.
This coverage criteria was applied to all establishments
and the results are presented in Exhibits VI-53, VI-54, VI-55,
and VI-56.
1. Alternate A- 1977. The analysis of cash flow/debt
retirement ratios applicable to Alternate A conditions is sum-
marized in Table VI-31 on tne following page.
-------
VI - 74
Table VI-31
Summary of Cash Flow/Debt Retirement
Coverage Ratios for Metal Finishing Establishments
Alternate A-1977
Lower Bound
Anodizing, Upper Bound
Establishment Cadmium Pickling, Precious
Size by Number Precious Metal Phosphatizing, Cadmium Metal Anodizing, Pickling
of Employees Plating Etching Plating Plating Phosphatizing Etching
*-* 'I2 1-21 -53 -92 -80 1.21
5-9 88 1.41 .58 .88 .87 1.41
10-19 1.21 1.45 1.00 1.21 1.06 1.45
20-49C1) 1.20 1.27 1.10 1.20 1.21 1.27
50-99 1.52 1.51 1.35 1.52 1.16 1.51
100-149 1.31 1.33 1.25 1.31 1.07 1.33
Note: (1) Data without Evaporator.
Source: Exhibit VI-53,
Exhibit VI-54.
It should be noted from the table that:
(a) Those firms which do not meet
the coverage criteria in 1977
for financing pollution costs
are the small establishments
of cadmium and precious metal
plating with the lower bound
cost estimates and small estab-
lishments of cadmium, precious
metal plating, anodizing and
phosphatizing with the upper
bound estimates.
(b) All establishment sizes over
10 employees can satisfy the., >.
financing coverage criteria.^ '
Firms considered in geographic and specialized market
segments partially isolated from direct competition are all able
The 20to 49 employee establishment would be an exception
to this statement if the evaporator costs were included.
-------
VI - 75
to meet the coverage ratio criteria due to the 10% price pre-
mium potential estimated for this group.
2. Alternate B - 1977. A review of the relationship
between the financing analysis and the profitability analysis
under Alternate A reveals a one to one correspondence in the
results of these criteria. Hence, a detailed financing analysis
for Alternate B in 1977 was not developed. A check indicated
that the same one to one correspondence with the results of the
income statement model will be valid for Alternate B also.
3. Effluent Guidelines - 1983. Municipal dischargers
will be unaffected by the effluent guidelines established in
1983. As a result, no price increase is estimated for the mar-
ket since municipal dischargers compete with direct dischargers
and also are expected to have 8070 or more of the total industry
capacity in 1983. Under these circumstances the financing re-
quirement for direct dischargers in 1983 can be viewed in two
ways :
(a) Incremental to 1977. This
view considers only the incre-
mental investment required in
1983 to bring 1977 treatment
systems up to the level re-
quired as relevant. As the
incremental cost for 1983 is
less than 1977 costs and 1977
pollution debt is amortized
in five years, the firms able
to finance 1977 treatment in-
vestments could finance the
1983 incremental investment
requirement even with no
market price increase.
-------
Full Costs in 1983. This
view examines the ability of
establishments to finance
the full costs of 1983 treat-
ment system requirements.
Pollution investments of 1977
or before will be six or more
years old in 1983. Within 2
to 6 years this investment
will likely require replace-
ment. Thus, examining the
ability to finance the full
1983 pollution control (i.e.,
1977 plus 1983) investment
appears relevant to the
firm's closure decision.
Table VI-32 below summarizes the coverage ratios for
direct dischargers based on financing the full cost of a 1983
treatment system.
Table VI-32
Summary of Coverage Ratios for
Metal Finishing Establlshments-1983
Direct Dischargers
Establishment
Size by Number
of Employees
1-4
5-9
10 - 19
20 - 49(1)
50 - 99
100 - 249
Lower Bound
Cadmium
Precious
Metal
Plating
0.01
Less than 0
Less than 0
Less than 0
0.31
0.22
Cost Estimates
Anodizing,
Phosphatizing,
Pickling,
Etching
0.22
0.11
Less than 0
0.23
0.37
0.32
Cadmium
Plating
Less than 0
Less than 0
Less than 0
Less than 0
0.155
0.148
Upper Bound
Precious
Metal
Plating
0.01
Less than 0
Less than 0
Less than 0
0.31
0.22
Cost Estimates
Anodizing ,
Phosphaticin;
Less thar. 0
Less than 0
Less than 3
Less than 0
0.315
0.287
Etching,
Pickling
n TI
0.11
Less than 0
0.28
0.37
0.32
Note: (1) Data excluding evaporation costs.
Sources: Exhibit Vl-55 and Exhibit VI-56.
-------
VI - 77
From the data in this table note that:
(a) None of the establishment
size categories are esti-
mated to be able to finance
full 1983 treatment system
requirements.
(b) Changing from a diversified
service establishment to a
specialized service establish-
ment will not enable plants
to finance in 1983.
(c) Even without investment in a
evaporator, 20 to 49 employee
shops do not meet the coverage
criteria.
Only above average profit establishments of 50 or
more employees are estimated to be able to finance full 1983
treatment system requirements for direct dischargers.
CLOSURE
ESTIMATES
Closures by process segment and establishment size under
1977 Alternate A and Alternate B and 1983 are identified in
Exhibits VI-57, VI-58, and VI-59.
(a) Change in the Number
of Establishments Due
to Baseline Conditions
Closures in certain establishment sizes will occur because
of baseline conditions which were discussed in Section VI-A.
Other establishment size segments will grow in number of plants
due to the baseline conditions. The closures and growth attri-
buted to baseline conditions in 1977 and 1983 are cited in
Table VI-33 on the following page.
-------
VI - 78
Table VI-33
Closures and Growth Due to Baseline Conditions
1977 1983(I)
Growth/Net Gain Growth/Net Gain
Size by Number of Number of of Number of
of Employees Closures Establishments Closures Establishments
1
b
10
20
50
100
250
4
9
- 19
- 49
- 99
- 249
- 499
48
27
-
-
_
_
-
_
30
38
11
4
2
81
24
_
mm
_
-
mm
37
40
10
6
3
Totals _7_5_ H 105 96
Note: (1) 1983 figures represent the incremental
change from 1977
Source: Exhibits VI-1 and VI-2
Note that only the small establishments of less than ten
employees close while all other size groups are growing. Thus,
the closures caused by the guidelines are adjusted in the small
establishment sizes for closures attributed to economic conditions
Closure estimates due to the establishment of the effluent
guidelines are measured against the current number of metal fin-
ishing establishments (Exhibit 1-15) and exclude closures pro-
jected in the baseline forecast due to the continuation of already
established economic trends. Closure of firms which would have
been established under the baseline are not considered. These
represent a loss of opportunity for the expansion of small
-------
VI - 79
business, but represent no "real" impact since the firms do not
now exist and (under the altered circumstances) will not come
to be established.
(b) The Closure
Decision
The closure decision by firms faced with changing market
conditions and a large investment in relation to current levels
will reflect their assessment of long-term prospects to con-
tinue to be a viable operation under these new conditions.
Planning will reflect:
1. Consideration of the impact of the complete pro-
gram of effluent regulation at the time the initial decisions
are made to invest substantial funds. The 1983 requirements
will be considered in making the 1977 investment decision to
meet the BPT guidelines.
2. Careful consideration will be given to the ad-
vantages of the alternatives available when staying in the
market.
(a) Invest in a completely new
facility to obtain efficien-
cies available with new
equipment since treatment
system costs are so large
in relation to current fixed
investment.
(b) Move to a municipal system to
avoid direct federal regulation
and stringent 1983 guidelines
even though new source stan-
dards will require investment
to conserve on water use.
-------
VI - 80
(c) Specialize in services to
avoid the more costly invest-
ment required to treat diverse
waste streams.
(d) Merge, buy, sell or otherwise
grow to a more viable size
firm to take advantage of the
economies of scale associated
with treatment systems.
(c) 1977 Closure
Estimates
In estimating closures, non-specialized firms unable to
finance are expected to specialize if they can finance with that
approach. Also, the 20 to 49 employee size class is assessed
on the basis of a treatment system without the use of an evap-
orator.
Those establishments which are estimated to close under
under Alternate A conditions as a result of pollution control
are shown in Table VI-34 on the following page.
-------
VI - 81
Table VI-34
A1ternate A Closure Analysis - 1977
Establishment
Size by Number
of Employees
1-4
5-9
10-19
20-49
50-99
100-249
250-499
Total
Establishment Closures
Direct
Dischargers
Lower Upper
Bound Bound
16
5
0
0
0
0
0
21
41
14
3
0
0
0
0
58
Municipal
Dischargers
Lower Upper
Bound Bound
52
20
0
0
0
0
0
Tl
133
50
13
0
0
0
0
196
Total
Range of
Closures
68-174
25- 64
0-16
0-0
0-0
0-0
0-0
93-256
Source: Exhibit VI-57.
Note from the table that:
1. The upper bound closure estimate associated with
the cost of treating diverse waste streams results in a higher
number of closures than the lower bound estimate. Firms falling
into this group will probably attempt to specialize in their
primary service to reduce treatment system costs. This would
appear feasible for many firms, thus closures are expected to
approach the lower bound closure rate.
-------
VI - 82
2. Lower bound closure estimates indicate a closure
rate of about 1070 of the total number of firms in the metal
finishing industry in 1967. The size classes with under 20
employees account for all of the estimated closures. The
upper bound estimates indicate a total closure rate of about
27%.
This closure analysis does not consider the growth in num-
ber of establishments in size classes of 10 employees or more.
This growth and the growth of average firm size is expected to
accelerate to provide the capacity needed to meet market needs
including the void left by the closure of small establishments.
Thus, closures are not expected to effect market supply con-
ditions significantly.
Alternate B does not require municipal dischargers to use
clarification treatment equipment. Direct dischargers must in-
stall clarification treatment equipment and pay the additional
costs associated with this equipment. However, due to their
position in the market they will not be able to increase prices
to cover these costs.
The closure analysis is summarized in Exhibit VI-58 and
is summarized in Table VI-35 on the following page.
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VI - 83
Table VI-35
Alternate B Closure Analysis - 1977
Establishment
Size by Number
of Employees
1-4
5-9
10-19
20-49
50-99
100-249
250-499
Total
Establishment Closures
Direct
Dischargers
Lower Upper
Bound Bound
16
5
8
0
0
0
0
29
41
14
22
0
0
0
0
77
Munic
Dischs
Lower
Bound
0
0
0
0
0
0
0
0
:ipal
irgers
Upper
Bound
22
8
0
0
0
0
0
30
Total
Range of
Closures
16-63
5-22
8-22
0-0
0-0
0-0
0-0
29-107
Source: Exhibit VI-58.
Note that under Alternate B conditions the closure impact
falls primarily on direct discharging establishments. This is
due to the low costs for pretreatment for the municipal discharger
compared to the costs for the direct dischargers in meeting the
1977 BPT standard. The percentage of total establishments im-
pacted is much lower than that of Alternate A ranging from
about 3% to 10%.
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ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A 'TYPICAL METAL FINISHING SHOP BY FIRM SIZE
AFTER POLLUTION CONTROL - MUNICIPAL DISCHARGERS - PROCESS PLANT TYPE
ALTERNATE B - 1977
Establishment Size by Number of Employees
Income-Expense Category
Sales
Less:
Profit
Less :
Less:
(2)
Production and
Operating
Expense (3)
Before Tax and Interest
Interest on old debt (4)
Interest on new debt (5)
Tax Provision
1-4
$60,290
53,273
$ 7,017
748
1,089
1,140
5-
$164
151
$ 12
1
1
2
9
,100
,817
,183
,197
,586
,100
10-19
$319,400
300,602
$ 18,798
2,244
2,094
3,200
20-49
$673,200
635,766
$ 37,434
5,032
13,152
9,240
50-99
$1,417,
1,296,
$ 120,
9,
18,
44,
100
743
357
677
680
200
100-249
$3,298
3,040
$ 247
28
38
91
,600
,672
,928
,960
,868
,200
250-499
$7,367,100
6,922,856
$ 444,244
-
97,6^4
166,400
Profit After Tax
$ 4,040 $ 7,400 $ 11,260 $ 10,010 $ 47,800 $ 98,900 $ 180,200
Note:
(1)
These profit values are applicable for anodizing, pickling, phosphatizing, and etching after the low pollution
cost estimates are included for municipal discharges only. Also, these apply for high costs of pickling
and etching.
(2) These sales figures have been adjusted according to market price increases of Section VI-B-
(3) These production and operating expenses are those of Exhibit II-3 plus pollutoon control operating costs.
Old debt interest is calculated for debt values from Exhibit II-4 at 8%.
New debt interest is calculated for the average pollution'investment at 10%.
(4)
)
(5
Source: Exhibit II-3, II-4, IV-
Ifr1
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ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY FIRM SIZE
AFTER POLLUTION CONTROL - MUNICIPAL DISCHARGERS - PROCESS PLANT TYPE
ALTERNATE B - 1977
Income-Expense Category
Sales
Less:
Profit
Less:
Less :
(2)
Production and
Operating
Expense (3)
Before Tax and Interest
Interest on old debt (4)
Interest on new debt (5)
Tax Provision
1-4
$60,980
55,436
$ 5,534
748
1,616
700
5-9
$166,,050
158,172
$ 7,878
1,197
2,111
1,000
Establishment Size
10-19
$323,100
308,907
$ 14,193
2,244
2,349
2,100
20-49
$681,000
644,542
$ 56,458
5,032
13,826
8,400
by Number of
50-99
$1,433,500
1,315,315
$ 118,185
9,677
19,908
42,500
Employees
100-249
$3,336,900
3,079,528
$ 257,372
28,960
41,712
89,600
250-499
$7,452,400
7,018,140
$ 434,260
-
103,332
158,600
Profit After Tax
$ 2,480 $ 3,570 $ 7,500 $ 9,200 $ 46,100 $ 97,100 $ 171,900
Note: (1) These profit values are applicable for cadmium and precious metal plating after low pollution control
cost estimates are included. Also applicable for high precious metal costs.
(2) These sales figures have been adjusted according to market price increases of Section VI-B.
(3) These production and operating expenses are those of Exhibit II-3 plus pollution control operating costs.
(4) Old debt interest is calculated for debt values from Exhibit II-4 at 8%.
(5) New debt interest is calculated for the average pollution investment at 10%.
Source: Exhibits II-3, II-4, IV-
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VI - 86
estimates have been developed based on an incremental analysis
with respect to Alternate A conditions in 1977.
Table VI-36
Additional 1977 Closures Due to
the 1983 "Spillover: Effect
1977 Effluent
Guideline
Closures
Lower Upper
Bound Bound
68 173
25 64
0 16
0 0
0 0
0 0
0 0
93 256
1983 Effluent
Guideline
"Spillover"
Closures
Lower
Bound
32
15
24
25
5
2
0
103
Upper
Bound
19
11
22
25
5
2
0
84
Establishment
Size by Number
of Employees
1- 4
5- 9
10- 19
20- 49
50- 99
100-249-
250-499
Total
Source: Exhibits VI-62, VI-63, and VI-66.
Total Closures
in 1977
Lower
Bound
100
40
24
25
5
2
0
196
Upper
Bound
193
75
38
25
5
2
0
340
Note that the estimated closure effect of the 1983 effluent
guidelines extends into the larger metal finishing establishments
with a significant number of closures in establishments with 20
or more employees.
A summary of the total number of estimated closures by size
category and type of discharge as a percent of the 1967 number
of establishments is shown in the table on the following page.
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VI - 87
Table VI-37
Summary of Estimated Closures in
Relation to the 1967 Number of Establishments
Establishment Size
by Number of *
Employees
•[__
5-
10-
20-
50-
4
9
19
49
99
100-249
250-499
Total
The Range of Closures as a Percent of
1967 Establishments (1)
Direct
Discharger
56%- 70%
53
65
63
45
50
0
-66
-68
-63
-45
-50
- 0
57%-65%
Municipal
Discharger
18%-
16 -
0 -
0 -
0 -
0 -
0 -
10%-
46%
39
10
0
0
0
0
27%
Total
27%
24
15
15
11
9
0
21%
-51%
-45
-23
-15
-11
- 9
- 0
-36%
Note: (1) Range is based on Lower and Upper Bound
Cost Estimates. See Section V-B.
Source: Exhibits VI-57 and VI-58.
Note that:
1. The estimated total closure impact on the industry
is significant ranging from 21% to 36% of the number of establish-
ments in the industry in 1967. This percentage impact would be
somewhat less if measured against the 1977 or 1983 baseline
projection of number of firms.
2. The direct discharger segment of the industry is
severely impacted by closure. Closure estimates for this seg-
ment range from 57% to 65% of all 1967 establishments. In
addition, there is a large impact on plants with over 20 employees,
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ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY FIRM SIZE ,, ,
AFTER POLLUTION CONTROL - DIRECT DISCHARGERS - PROCESS PLANT TYPE A*'1-'
Income-Expense Category
Sales (2)
Less: Production and Operating
Expense (3)
Profit Before Tax and Interest
Less: Interest on old debt (4)
Interest on new debt (5)
Less: Tax Provision
ALTERNATE
B - 1977
Establishment Size
1-4
$60,290
54,449
$ 5,841
748
1,673
855
5-9
$164,100
153,043
$ 11,057
1,197
2,460
1,850
10-19
$319,400
306,198
$ 13,202
2,244
3,260
1,925
by Number of Employees
20-49
$673,200
640,118
$ 33,082
5,032
15,250
3,200
50-99
$1,417,100
1,301,723
$ 115,377
9,677
21,805
35,670
100-249
$3,298,600
3,051,440
$ 247,160
28,960
48,000
77,000
Profit After Tax
$ 2,565 $ 5,550 $ 5,773 $ 9,600 $ 48,225 $ 93,200
Note: (1)
(2)
(3)
(4)
(5)
These profit values are applicable for anodizing, pickling, phosphatizing, and etching
after the low pollution cost estimates are included for direct discharges only. Also,
these apply for high costs of pickling and etching.
These sales figures have been adjusted according to market price increases of
Section VI-B.
These production and operating expenses are those ot Exhibit II-3 plus pollution
control operating costs.
Old debt interest is calculated for debt values from Exhibit II-4 at 8%.
New debt interest is calculated for the average pollution investment at 1070.
Source: Exhibit II-3, IV-8, IV-9, IV-10, IV-11.
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ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY FIRM SIZE
AFTER POLLUTION CONTROL - DIRECT DISCHARGERS - PROCESS PLANT TYPE B
(1)
ALTERNATE B - 1977
Establishment Size by Number of Employees
Income -Expense Categor
Sales
Less :
Profit
Less :
Less :
(2)
Production
Expense (3)
Before Tax
Interest on
Interest on
and
and
old
new
y
Operating
Interest
debt (4)
debt (5)
Tax Provision
1-4
$60,980
56,596
$ 4,384
748
2,196
360
5-9
$166
159
$ 6
1
3
,050
,966
,084
,197
,017
468
10-19
$323,100
311,228
$ 11,872
2,244
3,970
1,414
20-49
$681,000
648,838
$ 32,162
5,032
15,960
2,792
50-99
$1,433,
1,319,
$ H3,
9,
24,
33,
500
763
737
677
000
800
100-249
$3,336,900
3,089,240
$ 247,660
28,960
50,000
76,400
Profit After Tax
$ 1,080 $ 1,402 $ 4,224 $ 8,378 $ 46,060 $ 92,300
Note: (1) These profit values are applicable for cadmium and precious metal plating after low
pollution control cost estimates are included. Also applicable for high precious
metal costs. Direct discharger only.
(2) These sales figures have been adjusted according to market price increases of
Section VI-B.
(3) These production and operating expenses are those of Exhibit II-3 plus pollution
control operating costs.
(4) Old debt interest is calculated for debt values from Exhibit II-4 at 8%.
(5) New debt interest is calculated for the average pollution investment at 1070.
Source: Exhibits II-3, IV-8, IV-9, IV-10, IV-11.
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VI - 90
are a lower bound estimate of increased resource costs for the
entire economy since they include only costs directly incurred
by the industry. This occurs because this estimate considers only
the extra cost of using metal finishing services which continue
to be used. Substitute finished products and services brought
into use cost more than the present cost of metal finishing
services and this added cost (the amount above current metal
finishing costs) is not included in the measure.
An upper bound estimate of cost to the entire economy can
be constructed based on the fact that the maximum any set of sub-
stitutes could cost is the cost of continued use of the present
level of metal finishing services at the higher price level asso-
ciated with the proposed effluent guidelines. This is an upper
bound estimate since substitution will occur only when the price
of the substitute finished products or services becomes less than
the cost of using higher priced metal finishing services (provided
by establishments conforming to the proposed effluent guidelines).
However, substitutes also will be at a higher cost than the
original metal finishing services. Insofar as the costs of sub-
stitutes decline from improved technology or economies of higher
volume, more substitution will occur and the resource costs will
approach the lower bound estimates.
Although there is a lower and upper bound of resource costs,
in all cases the difference between the lower and upper bound
estimates is less than 7%. Therefore, upper bound resource cost
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VI - 91
estimates will not be calculated. However, it should be noted
that a range of total annual costs exists.
(d) 1977 Total
Annual Costs
The estimated increased in total annual costs for 1977 by
process segment, effluent discharge point and extent of establish-
ment diversification are presented in Exhibits VI-60 and VI-61
and are summarized below.
Table VI-38
Estimated Increased Annual Costs in the First
Year of Enforcement - Alternates A and B - 1977
(Millions of
Dollars)
Increased Annual Costs
Alternate A
Process Segment
Cadmium Plating
Precious Metal Plating
Anodizing
Pickling
Phosphatizing
Etching
Total
Upper
Bound
$ 6.
10.
21.
9.
2.
14.
$65.
6
2
8
9
7
2
4
Lower
Bound
$ 7
10
23
9
2
14
$68
.7
.2
.5
.9
.9
.2
.4
Alternate B
Upper
Bound
$ 6.
9.
21.
9.
2.
13.
$63.
.5
.9
.2
, 7
6
9
.8
Lower
Bound
$ 7.
9.
22.
9.
2.
13.
$66.
5
9
8
7
8
9
6
Source: Exhibits VI-60 and VI-61.
Note that the total increase in 1977 annual costs is sub-
stantial and varies from $63.8 million to $68.4 million, depending
on effluent discharge point and extent of establishment diversi-
fication. Anodizing has the highest increase in annual costs.
Phosphatizing has the lowest increase in annual costs.
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ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY
FIRM SIZE AFTER POLLUTION CONTROL - PROCESS PLANT TYPE A(l)
Income -
Expense Category
Sales (2)
Less :
Production and
Operating Expense
Earnings Before Taxes
and Interest
Less: Interest on Old
Debt (4)
Interest on New
Debt(s)(5)
Less: Tax Provision
Profit After Taxes
ALTERNATE
Establ
1-4 5-9
$60,400 $164,000
61,812 170,810
-1,412 -6,810
748 1,197
3,110 4,573
$-5,270 $-12,580
A 1983
ishment Size of Number of Employees
10 - 19 20 - 49 50 - 99 100 - 249
$320,300 $675,000 $1,420,000 $3,307,500
333,746 708,018 1,412,880 3,278,108
-13,446 -33,018 7,120 29,392
2,244 5,032 9,677 28,960
6,060 28,350 40,535 89,232
$-21,750 $-66,400 $-43,092 $-88,800
Notes: (1) These profit values are applicable to lower bound anodizing, pickling phosphatizing, and etching
establishments as well as upper bound pickling and etching establishments.
(2) These sales figures have been adjusted according to market price of Section VI-B.
(3) These production and operating expenses are those of Exhibit II-3 plus pollution control operating
operating costs.
(4) Old debt interest is calculated for debit value from Exhibit II-4 at 8%.
(5) New debt interest is calculated for the average pollution investment at 10%.
Sources: Exhibit II-3, II-4, V-8.
EXHIBIT VI- 24
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ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY
ALTERNATE A 1983
1
Income -
Expense Category
Sales<2) $61
Less :
Production and
Operating Expense 65
Earnings Before Taxes
and Interest -4
Less: Interest on Old
Debt (4)
Interest on New
Debt(s)(5) 4
Less: Tax Provision
Establ
- 4 59
,200 $166,600
,810 183,657
,610 -17,057
748 1,197
,082 5,609
ishment Size
10 19
$324,300
349,176
-24,876
2,244
7,380
of Number of Employees
20 - 49 50 - 99
$683,400 $1,438,500
724,898 1,432,269
-41,498 5,231
5,032 9,677
29,670 44,616
100 - 249
$3,348,700
3,353,500
-4,800
28,960
92,950
Profit After Taxes $-9,440 $-23,863 $-34,500 $-76,200 $ 48,062 $ 126,710
Notes: (1) These profit values are applicable to lower bound
bound precious metal establishments.
(2) These sales figures have been adjusted according
(3) These production and operating expenses are those
cadmium and precious metal plating and upper
to market price of Section VI-B.
of Exhibit II-3 plus pollution control operating
(4)
operating costs.
Old debt interest is calculated for debit value from Exhibit II-4 at 8%.
(5) New debt interest is calculated for the average pollution investment at 107=,.
Sources: Exhibit II-3, II-4, V-9.
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VI - 94
Metal finishing costs account for 2% to 570 of the total
product cost of most products which are metal finished. Imports
presently are not price competitive in these categories of metal
finished products. Metal finishing price increases of up to 35%
will not make imports price competitive. Therefore, no shift to
imported finished products in these categories will occur.
On this basis it can be concluded that any shift to imported
finished products in all categories of metal finished products
will be less than 1% of the total market for metal finishing
services.
(b) Local or
Regional
Economies
The proposed effluent guidelines will have little impact on
local or regional economies. An exception to this will be where
the establishment closed is the only establishment providing
metal finishing services. However, such closures will be un-
likely as most plants in isolated areas will be in a position to
raise prices to cover pollution control costs.
SUMMARY OF
IMPACT ASSESSMENT
A detailed summary of the impact of BPT and BAT effluent
guidelines on the metal finishing industry is shown in Exhibit
VI-63. Impact estimates are presented by direct and municipal
discharger and by size category of the industry.
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ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED NUMBER OF METAL FINISHING
ESTABLISHMENTS BY PROCESS SEGMENT-1977
Si ?f* nl~
Number of Firms 1977
Establishment Precious
by Number Cadmium Metal
of Employees Plating Plating Anodizing
1-4 35
5-9 13
10-19 23
20-49 26
50-99 9
100-249 2
250-499
Total 108
Mote: (1) The methodology f
Sources: Exhibit 1-6; Census
1958 through 1972;
49
19
32
36
10
2
2
150.
or projecting
116
44
80
85
23
7
3
358
number of
of Manufactures, United
and Kearney estimates.
Pickling Fhosphatizing^ Etching
30 14 84
16 7 41
13 6 39
16 6 40
528
4 2 10
1 - -
85. 11 222.
firms is explained in Appendix C.
States Department of Commerce,
Total
328
140
193
209
57
27
6
960
OQ
0>
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ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING
SHOP BY FIRM SIZE AFTER POLLUTION CONTROL
Sales'1)
less :
Prodaction and
Operating Expenses(2)
Earnings before Taxes and Interest
less:
Interest on Old Debtv^)
Interest on New Debt'4)
Less: Tax Provision
(20 to 49
Cadmium,
Precious
Metal Plating
$683,400
615,125
$ 47,275
5,032
8,660
5,825
.ALTERNATE A-1977
Employee Establishment without
(Lower Bound)
Anodizing,
Phosphatizing,
Pickling, Etching
$675,000
605,950
$ 69,050
5,032
7,955
26,912
Evaporator)
(Upper
Cadmium,
Precious
Metal Plating
$696,600
628,200
$ 68,400
5,032
9,908
25,760
Bound)
Anodizing,
Phosphatizing
$681,000
611,400
$ 69,600
5,032
9,297
26,531
Profit after Taxes
$ 27,760
$ 29,152
$ 27,700
$ 28,740
Notes: (1) Values for equity are taken from Exhibit 11-4.
(2) Values for long-term debt are taken from Exhibit II-4.
(3) Pollution control investment is the average investment cost of Exhibit V-8, V-9, V-10,
(4) New debt interest is calculated for the average pollution control investment at 1070.
Source: Exhibit II-4, V-8, V-9, V-10, V-ll.
V-ll.
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ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING
SHOP BY FIRM SIZE AFTER POLLUTION CONTROL
ALTERNATE A- 1983
(20 to 49 Employee Establishment without Evaporator)
Sales •'-'
less :
Production and
Operating Expenses (2)
Earnings before Taxes and Interest
L
*'
less :
Interest on Old Debt(3)
Interest on New Debt (4)
ecs: Tax t revision
rofit after Taxes
Notes: (1) Values for equity art
(Lower
Cadmium
Precious
Metal. Plating
$683,400
705,680
$-22,280
5,032
17,325
$-44,637
taken from Exhibit II-4.
Bound) (Upper Bound)
Anodizing, Cadmium,
Phosphatizing, Precious Anodizing,
Pickling, Etching Metal Plating Phosphatizing
$675,000 $696,600 $681,000
689,042 733,530 699,396
$-14,042 $-36,930 $-18,396
5,032 5,032 5,032
15,736 19,816 18,676
$-34,310 $-61,780 $-42,104
(2) Values ror long-term debt are taken from Exhibit II-4.
(3) Pollution control investment is the average investment cost of Exhibit V-8, V-9, V-10,
V-ll ,
(4) New debt interest is
Source: Exhibit II-/. , V-8, V-9,
calculated for the average
V-10, V-ll.
pollution control investmenr at 107-..
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ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED NUMBER OF METAL FINISHING
ESTABLISHMENTS BY PROCESS SEGMENT - 1983
Size of
Establishment
by Number
of Employees
1-4
5-9
10-19
20-49
50-99
100-249
250-499
Total
Note: (1) The
Number of Firms
Cadmium
Plating
27
8
28
30
10
3
_
106
methodology
Precious
Metal
Plating
38
11
39
42
12
3
2
141
Anodizing
88
25
93
103
26
8
5
348
for projecting number of
Pickling
22
18
16
19
6
4
2
87
firms is
Sources: Exhibit 1-6, Census of Manufacturers, United States
1958 through 1972; and Kearney estimates.
1983
Phosphatizing Etching Total
10 62 247
8 46 116
7 47 230
7 48 249
3 10 67
3 12 33
9
38. 225 951
explained in Appendix C. ^
fu
Department of Commerce ro
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ENVIRONMENTAL PROTECTION AGENCY
RATIO -OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE C (1)
Alte-nate A - 1977
Size of Establishment by Number of Employees
Average Long-Term
Capital Investment
Equity (2)
Long-Term Debt (3)
Pollution Control
Debt /Equity (4)
Total Average Capital
Earnings on Capital Be-
fore Taxes and Interest (5)
1-4
$17,950
9,350
25,460
$52^760
$ 2,864
5-9
$ 2C,720
14,960
35,939
$ 84,619
$ 5,771
10-19 20-49
$ 53,850 $141,400
28,050 62,900
43,304 165,976
$125,204 $370,276
$ 13,474 $ 35,630
50-99
$272,000
120,960
237,000
$629,960
$120,077
100-249
$ 307,000
362,100
492,960
1U662J)60
1 234^860
Ratio of Calculated Earn-
ings to Average Capital .054 .068 .108 .096 .191 JA.
Notes: (1) These calculations are applicable to the upper bound anodizing and phosphatizing
establishments.
(2) Values for equity are taken from Exhibit II-4.
(3) Values for long-term debt are taken from Exhibit II-4.
(4) Pollution control investment is the average investment cost of Exhibit V-10.
(5) Income before taxes and interest is taken from Exhibit VI-14.
Sources: Exhibit II-4, V-10, VI-14.
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-------
ENVIRONMENTAL PROTECTION AGENCY
BY
Size of
1977 FORECAST OF EMPLOYMENT
PROCESS SEGMENT AND ESTABLISHMENT SIZE (1)
Number
of Employees
Establishment Precious
by Number Cadmium
of Employees Plating
1-4 55
5-9 84
10-19 326
20-49 798
50-99 586
100-249 292
250-499
Total 2t141
Note: (1) Employment levels
The methodology is
Metal
Plating
78
124
454
1,105
651
292
520
3.224
determined
explained
Anodizing
184
286
1,135
2,610
1,498
1,168
780
7.661
using Exhibit
in Appendix C
Pickling Phosphatizing Etching Total
36 17
112
185
502
353
644
716
2.548
V-l,
Sources: Exhibit V-3, Exhibit C-l; Census of Manufacturers,
Commerce, 1958 through 1972.
49
85
189
141
322
_
803
and Exhibit C-l
United States
101 471
286 941
554 2,739
1,257 6,461
565 3,794
1,610 4,328
2,016
4.373 20.750
of Appendix C.
Department of
EXHIB]
H
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ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE C (1)
Alternate B - 1977
Municipal Discharger
Size of Establishment by Number of Employees
1-4 5-9
Average Long-Terra
Capital Investment
Equity (2) $17,950 $ 20,720
Long-Terra Debt (3) 9,350 14,960
Pollution Control
Debt/Equity (4) 14,340 25,770
Total Average Capital $41,640 $^66,500
Earnings on Capital Be-
fore Taxes and Interest (5) $ 4,782 $ 7,334
10-19 20-49
$ 53,850 $141,400
28,050 62,900
30,590 143,790
$112.490 $348,090
£_16i003 .$_ 37^_651
50-99
$272,000
120,960
208,560
$601, 52C
$121,733
100-249
$ 307,000
362,100
426,600
£1*595,100
3_ 263^620
Ratio of Calculated Earn-
ings to Average Capital
.115
.110
.142
.108
.202
,165
Notes: (1) These calculations are applicable to the upper bound anodizing and phosphatizing
establishments.
(2) Values for equity are taken from Exhibit II-4.
(3) Values for long-term debt are taken from Exhibit II-4.
(4) Pollution control investment is the average investment cost of Exhibit V-10.
(5) Income before taxes and interest is taken from Exhibit VI-18.
Sources: Exhibit II-4, V-10, VI-18.
W
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ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE D (1)
Altevnate
B - 1977
Municipal Discharger
Size of Establishment by Number of Employees
1-4
Average Long-Term
Capital Investment
Equity (2) $17,950
Lon^- Terra Debt (3) 9,350
Pollution Control
Debt/Equity (4) 25.460
Total Average Capital $52,760
Earnings on Capital Be-
fore Taxes and Interest (5) $ 4,094
Ratio of Calculated Earn-
ings to Average Capital .078
5-9
$ 28,720
14,960
32,440
$ 76J.OO
$ 6^141
.081
Notes: (1) These calculations are applicable to
(2) Values for equity are
(3) Values for long-term
10-19 20-49 50-99 100-249
$ 53,850 $141,400 $272,000 $ 807,000
28,050 62,900 120,960 362,100
40,390 157,650 230,000 470.000
$122,290 £361,950 $622,960 $1,639J.O(
3
$ 14,583 £__38,797 $122,871 $ 272.460
.119 .107 .197 .166
the upper bound cadmium plating establishments.
taken from Exhibit II-4.
debt are taken
(4) Polluation control investment is the
(5) Income before taxes and interest is
Sources: Exhibit II-4, V-ll, VI-
19.
from Exhibit II-4.
average investment cost of Exhibit V-ll.
taken from Exhibit VI- 19.
M
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ENVIRONMENT PROTECTION AGENCY
BY
Size of
Establishment Precious
by Number Cadmium Metal
of Employees Plating Plating
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 - 499
Total
Note: (1)
Sources :
($000)
$ 1,000
1,360
9,630
22,610
17,470
13,580
-
$65,650
Values are
in Exhibit
($000)
$ 1,420
1,890
13,400
31,660
20,975
13,580
14,760
$97,685
1983 FORECAST OF VALUE OF SHIPMENTS
PROCESS SEGMENT AND ESTABLISHMENT SIZE(l)
Anodizing
($000)
$ 3,260
4,250
32,000
77,600
45,410
36,210
36,870
$235,600
derived using Exhibit
C-3. These values are
Exhibit V-6; Exhibit C-
Commerce, 1958 through
3; Census of
1972.
Pickling Phosphatizing Etching Total
($000) ($000)
$ 790 $ 340
3,480 1,540
6,310 2,760
15,200 5,750
16,900 8,520
19,350 14,510
38,380
$100,410 $33,420
V-6 and average value
in 1973 dollars.
Manufactures, United
($000) ($000)
$ 2,230 $ 9,040
8,850 21,370
18,550 82,650
38,350 191,170
28,210 137,485
58,050 155,290
90,000
$154,240 $687,005
of shipments per employee
States Department of
EXHIBIT
M
1
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ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED FIRST
YEAR IMPACT
ON DOLLAR VOLUME
- ALTERNATE
(Millions of Dollars)
Lower Bound (2)
Process Segment
Cadmium Plating
Precious Metal Plating
Anodizing
Pickling
Phosphatizing
Etching
Total
Baseline
Volume
$49.2
75.2
178.5
81.5
21.9
116.5
$522.8
Demand
Reduction (4)
$ 1.4
2.1
4.5
2.0
0.6
2.9
$13.5
Revised
Baseline
Volume (5)
$ 47.8
73.1
174.0
79.5
21.3
113.6
$509.3
A - 1977 (1)
Upper Bound
Demand
Re duct ion (4)
$ 1.6
2.1
4.8
2.0
0.7
2.9
$14.1
(3)
Revised
Baseline
Volume (5)
$ 47.6
73.1
173.7
79.5
21.2
113.6
$508.7
Notes: (1) Baseline Volume, Demand Reduction, and Revised Baseline Volume are given in 1973
constant dollars.
(2) The lower bound estimate assumes that all establishments that are good candidates
for secondary operations, do not have them. The rational used to categorize
establishments into lower and upper bounds is fully documented in Section V-B.
(3) The upper bound estimate assumes that all establishments which are good candidates
for secondary operations do have them. The rational used to categorize establish-
ments into lower and upper bounds is fully documented in Section V-B.
(4) Demand Reduction is calculated as follows:
Demand Reduction = Baseline Volume x Elasticity of Demand (-.2) x Percent
Market Price Increase. «
M
(5) Revised Baseline Volume = Baseline Volume - Demand Reduction. H
Source: Exhibit VI-5 and Table VI-14.
-------
ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE C (1)
Alternate B- 1977
(Direct Discharger)
Size of Establishment by Number of Employees
Average Long-Term
Capital Investment
Equity (2)
Long-Term Debt (3)
Pollution Control
Debt/Equity (4)
Total Average Capital
Earnings on Capital Be-
fore Taxes and Interest (5) $ 2,584
Ratio of Calculated Earn-
ings to Average Capital
Notes: (1) These calculations are applicable to the upper bound anodizing and phosphatizing
establishments.
(2) Values for equity are taken from Exhibit II-4.
(3) Values for long-term debt are taken from Exhibit II-4.
(4) Pollution control investment is the average investment cost of Exhibit V-10.
(5) Income before taxes and interest is taken from Exhibit VI-22.
Source: Exhibits II-4, V-10, VI-22.
1-4
$17,950
9,350
25,460
$52,760
5-9
$ 28,720
14,960
35,939
$ 84,619
10-19
$ 53,850
28,050
43,304
$125,204
20-49
$141,400
62,900
165,976
$370,276
50-99
$272,000
120,960
237,000
$629,960
100-249
$ 807,000
362,100
492,960
$1,662,060
$ 2,584
$ 5,221
$ 8,074
$ 33,230
$115^077
$ 253,060
.049
.061
.064
.090
.183
.152
t-H
5
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ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE D (1)
Alternate B- 1977
(Direct Discharger)
1-4
Average Long- Term
Capital Investment _
Equity (2)
Long-Term Debt (3)
Pollution Control
Debt/Equity (4)
Total Average Capital
Earnings on Capital Be-
fore Taxes and Interest (5) $ 2.596
Ratio of Calculated Earn-
ings to Average Capital
.044
Size of Establishment by Number of Employees
5-9
10-19
20-49
50-99
$17
9
30
$58
,950
,350
,982
,282
$
$
28,
14,
48,
91,
720
960
120
800
$ 4,198
.046
$ 11,839
.089
$ 33.430
.089
$115,025
.180
100-249
$ 53
28
50
$132
,850
,050
,955
,855
$141
62
172
$376
,400
,900
,080
,380
$272
120
246
$639
,000
,960
.480
,440
$
$1
807
362
511
,681
,000
,100
,920
,020
$ 259,600
.154
Notes: (1) These calculations are applicable to the upper bound cadium plating establishments.
(2) Values for equity are taken from Exhibit II-4.
(3) Values for long-term debt are taken from Exhibit II-4.
(4) Pollution control investment is the average investment cost of Exhibit Vl-11.
(5) Income before taxes and interest is taken from Exhibit VI-23.
Source: Exhibits II-4, V-ll, VI-23.
-------
ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING, .INDUSTRY
ANALYSIS OF INCREMENTAL CHANGES IN ANNUAL POLLUTION CONTROL COSTS BY ADDING
HIGHER COST PROCESSES FOR TEN EMPLOYEE ESTABLISHMENT
Lowest Cost
Svstem(l)
Primary
Processes
Cadmium
Type of
System
Precious Metal
Plating
Anodizing
Pickling
Phosphatizing
Etching
Annual
Cost
Add Type B
(2)
Service
$30,600 N/A
Incremental
Annual Cost
N/A
30,600 N/A N/A
23,132 Cadmium Plating $7,468
Precious Metal
Plating
Zinc Plating
Other Cyanide
Plating
23,132 Cadmium Plating 7,468
Precious Metal
Plating
Zinc Plating
Other Cyanide
Plating
23,132 Cadmium Plating 7,468
Precious Metal
Plating
Zinc Plating
Other Cyanide
Plating
23,132 Cadmium Plating 7,468
Precious Metal
Plating
Zinc Plating
Other Cyanide
Plating
(3)
Type C
Service
Incremental
Annual Cost
Add Type D
(2)
Hard Coat $6,530
Anodizing
Chromating
Dichromating
Chrome Plating
(2)
Hard Coat 6,530
Anodizing
Chromating
Dichromating
Chrome Plating
Hard Coat 7,468
Anodizing
Chromating
Dichromating
Chrome Plating
Hard Coat 8,268
Anodizing
Chromating
Dichromating
Chrome Plating
Hard Coat 8,268
Anodizing
Chromating
Dichromating
Chrome Plating
Hard Coat 8,268
Anodizing
Chromating
Dichromating
Chrome Plating
(2)
(3)
Service
Lead Plating
Tin Plating
Electroless
Plating
Incremental
Annual Cost
See Note (2)
Lead Plating See Note (2)
Tin Plating
Electroless
Plating
Lead Plating
Tin Plating
Electroless
Plating
Lead Plating
Tin Plating
Electroless
Plating
Lead Plating
Tin Plating
Electroless
Plating
Lead Plating
Tin Plating"
Electroless
Plating
$13,998
13,998
13,998
13.998
Notes: (1) Type A is the baseline treatment process, and all plants would have this as a minimum level of treatment,
therefore it is not necessary to analyze adding Type A to any process.
(2) If a plant has a B Type process and adds the C processes (or is a C Type and adds the B) it automatically
becomes a type D process plant, capable of treating both cyanides and chromium wastes.
(3) If a plant has only A Type processes, and adds B only or C only it still would have limited waste
treatment capacilities. However if it adds B or C and subsequently adds the other, then note (2) above
applies.
Source: Battelle Columbus Laboratories and Kearney estimates.
ffi
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Primary
Processes
Cadmuim
Precious Metal
Plating
Anodizing
Pickling
Phosphatizing
Etching
Lowest Cost System
Type
Of System
(1)
Cost
103,800
103,800
94,353
94,353
94,353
94,353
ENVIRONMENTAL PROTECTION AGENCY
METAL FINISHING INDUSTRY
Analysis Of Incremental Chartes In Annual Pollution Control Costs
L~^ <~l L_W . .. — .
Add Type fi(2)
Typical Incremental
Service Annual Cost
N/A (4) N/A
N/A N/A
7,468(3)
Cadmium Plating
Precious Metal Plating
Zinc Plating
Other Cyanide Plating
7,468
Cadmium Plating
Precious Metal Plating
Zinc Plating
Other Cyanide Plating
7,468
Cadmium Plating
Precious Metal Plating
Zinc Plating
Other Cyanide Plating
7,468
Cadmium Plating
Precious Metal Plating
Zinc Plating
Other Cyanide Plating
Add Type C
Typical Incremental
Service Annual Cost
Hard Coat 13,780 <2)
Anodizing
Chromating
Dichromating
Chrome Plating
Hard Coat 13,780 (2)
Anodizing
Chromating
Dichromating
Chrome Plating
(3)
Hard Coat 6,647
Anodizing
Chromating
Dichromating
Chrome Plating
Hard Coat 6,647
Anodizing
Chromating
Dichromating
Chrome Plating
Hard Coat 6,647
Anodiz ing
Chromating
Dichromating
Chrome Plating
Hard Coat 6,647
Anodizing
Chromating
Dichromating
Chrome Plating
Add Type D^
Typical
Service
Lead Plating
Tin Plating
Electroless Plating
Lead Plating
Tin Plating
Electroless Plating
Lead Plating
Tin Plating
Electroless Plating
Lead Plating
Tin Plating
Electroless Plating
Lead Plating
Tin Plating
Electroless Plating
Lead Plating
Tin Plating
Electroless Plating
2)
incremental
Annual Cost
See Note' '
See Note^ '
23,257
23,257
23,2^7
23,257
Notes:
(1)
(2)
(3)
Type A is the baseline treatment process, and all plants would have this as a minimum level treatment; therefore it is not necessary to
analyze adding Type A to any process.
If a plant has a "B" Type Process and adds the "C" Precesses, (or is a "C" Type and adds the "B"), it automatically becomes a Type D Process
plant, capable of treating both cyanides and c.hromium wastes.
If a plant has only "A" Type Processes, and adds "B" only or "C" only, it still would have limited waste treatment capabilities.
it adds B or C and subsequently adds the other, then Note (2) above applies.
However; if
(4) N/A is not applicable.
Sources: Battille Columbus Laboratories and Kearney estimates.
Od
-------
ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE C (1)
Alternate A - 1983
Average Long-Term
Capital Investment
Pollution Control
Debt/Equity (4)
1-4
Size of Establishment by Number of Employees
5-9
10-19
20-49
50-99
47,330
Total Average Capital 174,630
65,140
1108*180
80,490
308,550
$512.850
440,580
5833^540
100-249
Equity (2)
Long-Term Debt
(3)
$17
9
,950
,350
$
28,720
14,960
$
53,850
28,050
$141,400
62,900
$272,000
120,960
$
807,000
362,100
966,680
12,1_35_J1_Q
Earnings on Capital Before
Taxes and Interest (5) $-7,639 IdLJLlgg IrlJUQOZ 1=36^873
Ratio of Calculated Earn-
ings to Average Capital Less than 0 Less than 0 Less than 0 Less than 0
.001
Less than 0
Notes: (1)
(2)
(3)
(4)
(5)
These calculations are applicable to the upper bound anodizing and phosphatizing
establishments.
Values for equity are taken from Exhibit II-4.
Values for long-term debt are taken from Exhibit II-4.
Polluation control investment is the average investment cost of Exhibit V-10.
Income before taxes and interest is taken from Exhibit VI-26.
Sources: Exhibit II-4, V-10, VI-26.
I
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H 4-J 4-J 4-1 Q O >-
O C /~ v 4-1
i-J M CN g d -H
^^ i-i O D
QJ r-l QJ -r-l CT
bO co X H 4-) H
CO 4-J 4J 1 3 \.
5-1 -H -r-l bO r-l 4-1
0) a 3 C r-i Xi
r-l QJ
cO 5-i
4-1 0
• r^ 1 I-J
Cu QJ x-v
cO CQ m
U ^
i— I
0) CO 4J
bO 4-) co
CO T-l QJ
J-l Cu 5-i
QJ CO QJ
> CJ 4J
>co cro ocul coco
M-l
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4-1
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4-1 bC
co d
OHTH:
EXHIBIT VI-45
CO
4J
d
O)
g
x;
CO r-4
•r-l r-l
r-l 1
CO
4-1
CO 4-1
QJ T-l
M -r4
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•r4 X
4-J W
CO
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QJ r^
r-l g CO M 4-)
XI O 4J 'rl CO
co j-i QJ
a <4-( QJ 4-1 5-1
•r-4 5-4 d 0)
r-l d CO QJ 4-1
Cu QJ g d
Ct,^ 4J 4-) -rl
CO CO Xl CO
4J Q) QJ ID
QJ tJ > d
5-4 QJ d CQ
co 5-i E -H
co 5-i co
CO QJ r— t QJ
d >-,4J O X
O 4-J I J-i co
•rl -rl Ofl 4J 4J
4.) 3 d d
CO CT1 O O QJ
r-l 01 r-l O 5-1
3 O
o 5-1 J-i d m
r-i o o o at
CO M-l M-l *r-4 Xl
O 4-J
co co co QJ
0) QJ QJ 3 g
CO 3 3 r-l O
QJ r-l r- 1 r-l O
x: to co o d
H »On M
x~x/ — ^s~ xx — ^x"^
r-i CM cn
ON
1
^j-
1
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M
co
4J
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fN
•rl
x:
x
PJ
CO
QJ
O
5-i
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O
CO
-------
ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY
FIRM SIZE AFTER POLLUTION CONTROL - PROCESS PLANT TYPE C(l)
ALTERNATE
A 1977
Establishment Size of Number of Employees
Sales^
Less:
2)
Production and
Operating Expense (3)
Profit Before Taxes and
Interest
Less :
Less :
Profit
Interest on Old
Debt (4)
Interest on New
Debt (s) (5)
Tax Provision
After Taxes
1-4
$60,980
58,116
2,864
748
2,546
0
$ -430
5-9
$166,050
160,279
5,771
1,197
3,504
240
$ 830
10 - 19
$323,100
313,926
9,174
2,244
4,330
1,510
$ 5,390
20 49
$681,000
645,370
35,630
5,032
16,598
6,700
$ 7,300
50 99
$1,433,500
1,313,423
120,077
9,677
23,700
41,600
$ 45,100
100 - 249
$3,306,900
3,072,040
234,860
28,960
52,000
88,300
$ 95,600
250 499
$7,452,400
7,002,010
450,000
130,000
153,600
$ 166,500
Notes: (1) These profit values are applicable for the high pollution costs of anodizing and phosphatizine under
Alternate A.
(2) These sales figures have been adjusted according to market price increase of Section VI-B.
(3) These production and operating expenses are those of Exhibit II-3 plus pollution control o
(4) Old debt interest is calculated for debit value from Exhibit II-4 at 8%.
(5) New debt interest is calculated for the average pollution investment at 10%.
operating costs.
M
X
33
Sources: Exhibit II-3, Exhibit II-4 and Exhibit IV 10.
-------
ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY
FIRM SIZE AFTER POLLUTION CONTROL - PROCESS PLANT TYPE D(l)
ALTERNATE A 1977
Establishment Size by Number of
1
Sales (2) $62
Less :
Profit
Production and
Operating Expense (3) 59
Before Taxes and
Interest 2
Less:
Less:
Profit
Notes :
Interest on Old
Debt (4)
Interest on New
Debt(s)(5) 3
Tax Provision
After Taxes $-1
(1) These profit values
(2) These sales figures
Section VI-B.
(3) These production and
- 4
,380
,604
,776
748
,098
-
,070
are
have
5 -
$169,
165,
4,
1,
4,
-
$ -
calculated
9
900
202
698
197
312
810
for
been adjusted
operating expenses
10 -
$330,
317,
12,
2,
5,
1,
$ 4,
19
500
861
639
244
095
170
130
high pollution
20 -
$696,
661,
35,
5,
17,
6,
$ 6,
costs
49
600
370
230
032
208
240
750
50 -
$1,466
1,347
118
9
24
40
$ 43
Employees
99 100 - 259 250 - 499
,300 $3,413,300 $7,623,100
,575 3,144,940 7,182,200
,725 268,360 440,900
,677 28,960
,648 54,000 135,000
,500 89,000 146,800
,900 $ 96,400 $ 159,100
of cadmium plating.
according to market price increase
are those of
Exhibit
II-3
of
plus pollution
control operating costs.
Sources
(4) Old debt interest is
(5) New debt interest is
calculated for debit value
calculated for the
: Exhibit II-3, Exhibit II-4
average
from
Exhibit
II-4
at 8%.
pollution investment at 107».
and Exhibit IV- 11.
hrj
«
35
M
w
M
H
<
HH
i
I—1
01
-------
VI •• 34
(d) 1983 Closure
Estimates
The major effect of the 1983 effluent guidelines will be
its impact on 1977 investment decisions. Those establishments
impacted in 1983 are the direct dischargers only. It is assumed
that municipal dischargers, which account for in excess of 80%
of industry capacity, will meet the same pretreatment standards
at the same pollution control cost as in 1977. Therefore, the
costs of the municiapl dischargers will determine the market
price for metal finishing services. Hence, municipal dischargers
are expected to have no further closure impact due to the 1983
guidelines. However, direct dischargers will be severely dis-
advantaged under these circumstances, since their costs will rise
significantly.
Since this future 1983 impact will be known in 1977, it will
be reflected in the decisions made at that time. Thus, the
closure impact of the 1983 effluent guidelines is a "spillover"
effect on closure and investment decisions made in 1977.
There are three possible alternatives which have been analyzed
to determine the closure impact due to the 1983 guidelines.
1. Based on the full cost of pollution control (1977
and 1983) direct discharging establishments are adequately profit-
able. Under these circumstances 1977 and 1983 investments will
be planned and made. Only the establishments with 50 or more
employees with a 10% price premium due to service specialization
or geographic isolation fall into this group. This is indicated
-------
VI - 85
by the data shown in Exhibits VI-49, VI-52 and VI-56.
2. Direct discharging establishments can make enough
profit on 1977 investment to make this investment and then close
in 1983. Analysis of the income model data and cash flow data
in Exhibits VI-43 to VI-47, indicate that firms cannot make a
sufficient return on 1977 investment with a six year life to make
this an attractive approach. Thus, 1977 decisions will reflect
adequate plans to deal with 1983 requirements. Few, if any,
firms will actually close in 1983 since the impact of the 1983
effluent guidelines will have been reflected in the 1977 closure
and investment decisions.
3. Direct discharging establishments which are un-
profitable under the 1983 guidelines, will take steps in 1977
to put themselves in a position to be profitable. Such steps
would include moving to a municipal system in 1977 and/or growing
to a more efficient size and profitable position prior to 1983.
On a judgemental basis, Kearney estimates 5070 of the firms
(unaffected by closure impacts in 1977, but theoretically unable
to be profitable under the 1983 guidelines) will take such action.
The remainder will be closed. These are the "spillover" impact
closures associated with the 1983 effluent guidelines.
Table VI-36, on the following page, summarizes the estimated
1977 closure impact together with the estimated "spillover"
closure impact due to the 1983 effluent guidelines. The 1983
-------
ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY FIRM SIZE
AFTER POLLUTION CONTROL - MUNICIPAL DISCHARGERS - PROCESS PLANT TYPE C*.1'
ALTERNATE B - 1977
Income
Sales
Less :
Profit
Less:
Less:
-Expense Category
(2)
Production and
Operating
Expense (3)
Before Tax and Interest
Interest on old debt (4)
Interest on new debt (5)
Tax Provision
Establishment Size
1-4
$60,700
55,918
$ 4,782
748
1,434
570
5-9
$165,500
158,166
$ 7,334
1,197
2,577
780
10-19
$322,000
306,997
$ 16,003
2,244
3,059
2,100
20-49
$678,600
640,949
$ 37,651
5,032
14,379
8,400
by Number of
50-99
$1,428,500
1,306,767
$ 121,733
9,677
20,856
43,800
Employees
100-249
$3,325,100
3,061,480
$ 263,620
28,960
42,660
92,200
250-499
$7,426,100
6,979,700
$ 446,400
-
103,330
164,700
Profit After Tax $ 2,030 $ 2,780 $ 7,600 $ 9,240 $ 47,400 $ 99,800 $ 178,400
Note: (1) These profit values are applicable for anodizing and phosphatizing after high pollution cost estimates are
included for the municipal discharger.
(2) These sales figures have been adjusted according to market price increases of Section IV-B.
(3) These production and operating expenses are those of Exhibit II-3 plus pollution control operating costs.
(4) Old debt interest is calculated for debt values from Exhibit II-4 at 8%~.
(5) New debt interest is calculated for the average pollution investment at 10%.
Source: Exhibit II-3, II-4, Vi-
I
I-1
00
-------
ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY FIRM SIZE
AFTER POLLUTION CONTROL - MUNICIPAL DISCHARGERS - PROCESS PLANT TYPE
ALTERNATE B - 1977
Establishment Size
Income-Expense Category
Sales
Less:
Profit
Less :
Less :
(2)
Production and
Operating
Expenses (3)
Before Tax and Interest
Interest on old debt (4)
Interest on new debt (5)
Tax Provision
1-4
$62,200
58,106
$ 4,094
748
2,546
200
5-9
$169,400
163,259
$ 6,141
1,197
3,244
380
10-19
$329,700
315,117
$ 14,583
2,244
4,039
1,830
20-49
$694,800
656,003
$ 38,797
5,032
15,765
8,600
by Number of
50-99
$1,462,600
1,339,723
$ 122,877
9,677
23,000
43,300
Employees
100-249
$3,404,500
3,132,040
$ 272,460
28,960
47,000
94,300
250-499
$7,603,400
7,149,900
$ 453,500
-
117,000
161,500
Profit After Tax
600
$ 1,320 $ 6,470 $ 9,400 $ 46,900 $ 102,200 $ 175,000
Note: (1) These profit values are applicable for cadmium plating after high pollution cost estimates are included.
(2) These sales figures have been adjusted according to market price increases of Section VI-B.
(3) These production and operating expenses are those of Exhibit V-3 plus pollution control operating costs.
(4) Old debt interest is calculated for debt values from Exhibit II-A at 8%.
(5) New debt interest is calculated for the average pollution investment at 10%.
s
Source: Exhibit II-3, II-4, IV-
H
H
-------
VI - 88
3. The impact on the establishments with less than
10 employees is not as a high percentage due to the exclusion of
baseline closures. Including baselines closures these segments
of the industry are almost entirely closed.
The employment impact of closures is difficult to estimate.
(10)
From 12.8% to 16.5% of industry capacity will close. Munici-
pal dischargers and larger size establishments are expected to
take short- and long-term steps to expand to handle the total
industry volume. Thus, total industry employment is not likely
to change significantly from the baseline forecast estimates.
However, it is apparent some dislocations will occur. In
total, closures will eliminate approximately 2,200 to 2,800 jobs.
Some of these employees will be able to move to expanding estab-
lishments in their economic region; however, others will undoubtedly
be required to find employment in other industries. The absolute
number of jobs concerned is so low that it is unlikely that more
than a few communities would have a significant unemployment
impact.
TOTAL ANNUAL
COSTS
(a) Purpose
The purpose of this section is to estimate the cost of the
resources which will be used to meet the proposed effluent
Footnote (10) Based on employment as a measure
of capacity.
-------
VI - 89
guidelines in 1977 and 1983. The total annual cost estimate is
the total increase in the cost of metal finishing services to
end user industries resulting from the adoption of the proposed
effluent guidelines. It is representative of the resources society
will pay to achieve pollution abatement in the metal finishing
industry.
(b) Total Annual
Cost Analysis
Framework
Resource cost estimates are based on price increases for .
metal finishing services. These reflect the cost of resources
expended to meet the effluent guidelines. Price increases for
metal finishing services include an allowance for the increased
annual cost of capital, depreciation, labor, operating and main-
tenance costs. Any savings gained from the installation of pol-
lution control equipment are also considered. Costs are cal-
culated by obtaining the dollar amount of the projected percentage
price increase using the revised baseline forecast as a base.
Resource costs are estimated with a separate calculation
for each process segment, effluent discharge point and extent of
establishment diversification.
(c) Upper and Lower
Bound Estimates
Total annual cost estimates based on total annual costs for
operating metal finishing plants with the proper pollution equip-
ment installed and the revised baseline dollar volume essentially,
-------
ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY FIRM SIZE
AFTER POLLUTION CONTROL - DIRECT DISCHARGERS - PROCESS PLANT TYPE
ALTERNATE B - 1977
Income-Expense Category
Sales (2)
Less: Production and Operating
Expense (3)
1-4
Establishment Size by Number of Employees
5-9
10-19
20-49
50-99
Profit After Tax
$ -710 $
100-249
$60,700 $165,500 $322,000 $678,600 $1,428,500 $3,325,100
58,116 160,279 313,926 645,370 1,313,423 3,072,040
Profit Before Tax and Interest $ 2,584
Less :
Less :
Interest on old debt
Interest on new debt
Tax Provision
(4) 748
(5) 2,546
-
$ 5,221
1,197
3,504
130
$ 8,074
2,244
4,330
375
$ 33,230 !
5,032
16,598
2,900
? 115,077 !
9,677
23,700
34,616
? 253,060
28,960
52,000
77,960
390
$ 1,125 $ 8,700 $ 47,083 $ 94,140
Note: (1) These profit values are applicable for anodizing and phosphatizing after high
pollution cost estimates for the direct discharger.
(2) These sales figures have been adjusted according to market price increases of
Section VI-B.
(3) These production and operating expenses are those of Exhibit II-3 plus pollution
control operating costs.
(4) Old debt interest is calculated for debt values from Exhibit II-4 at 8%.
(5) New debt interest is calculated for the average pollution investment at 10%.
Source: Exhibit II-3, IV-8, IV-9, IV-10, IV-11.
M
X
ffi
Ni
-------
ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY FIRM SIZE
AFTER POLLUTION CONTROL - DIRECT DISCHARGERS - PROCESS PLANT TYPE DC1)
ALTERNATE B - 1977
Establishment Size by Number of Employees
Income -Expense Category
Sales
Less :
Profit
Less :
Less :
(2)
Production and Operating
Expenses (3)
Before Tax and Interest
Interest on old debt (4)
Interest on new debt (5)
Tax Provision
1-4
$62,200
59,604
$ 2,596
748
3,098
-
5-
$169
165
$ 4
1
4
9
,400
,202
,198
,197
,312
-
10-19
$329
317
$ 11
2
5
1
,700
,861
,839
,244
,095
,125
20-49
$694
661
$ 33
5
17
2
,800
,370
,430
,032
,208
,800
50-99
$1,462
1,347
$ 115
9
24
34
,600
,575
,025
,677
,648
,140
100-249
$3,404,500
3,144,940
$ 259,600
28,960
54,000
80,170
Profit After Tax
$-1,250 $ -1,311 $ 3,375 $ 8,390 $ 46,560 $ 96,470
Note: (1) These profit values are applicable for cadmium plating after high pollution cost
estimates are included. Direct discharge only.
(2) These sales figures have been adjusted according to market price increases of
Section IX.
(3) These production and operating expenses are those of Exhibit V-3 plus pollution
control operating costs.
(4) Old debt interest is calculated for debt values from Exhibit V-4 at 870.
(5) New debt interest is calculated for the average pollution investment at 10%.
Source: Exhibit II-3, and Exhibit IV-8, IV-9, IV-10, IV-11.
I
s>
oo
-------
VI - 92
(e) 1983 Total
Annual Costs
The approximate increase in total annual costs for 1983 is
calculated using the Alternate A market price increases. The
reason for this is that market prices will not be increased
beyond the 1977 increases as discussed in Section VI-B.
The estimated increase in total annual costs and revised actual
dollar volume by process segment and extent of diversification
are presented in Exhibit VI-62 and are summarized in Table VI-39
below. These represent the full costs in 1983 and are not incre-
mental to 1977.
Table VI-39
Estimated Increased Annual Costs in
the First Year of Enforcement - 1983
(Millions of Dollars)
Increased Annual Costs
Process Segment Lower Bound Upper Bound
Cadmium Plating $ 8.9 $10.2
Precious Metal Plating 13.2 13.2
Anodizing 28.7 30.9
Pickling 12.3 12.3
Phosphatizing 4.1 4.4
Etching 18.8 18.8
Total $86.0 $89.8
Source: Exhibit VI-62
Note that the total increase in 1983 annual costs over the
baseline year cost rate of 1973 is substantial and varies from
$86.0 million to $89.8 million, depending on the extent of
-------
VI - 93
establishment diversification. The resource cost relationships
which appear in 1977 also appear in 1983.
(f) Summary
The analysis of the cost of resources required to meet the
proposed effluent guidelines indicates that increased annual costs
over the 1973 level will be significant. Total increased 1977
annual costs range from $63.8 million to $68.4 million. Total
increased 1983 annual costs range from $86.0 million to $89.8
million.
OTHER
IMPACTS
The following paragraphs present an analysis of impacts on
other segments of the economy which are important.
(a) Foreign
Trade
Import competition exists primarily for small finished pro-
ducts. Domestic products, such as fasteners, are presently
priced 5% to 10% below imported products. The finishing operation
accounts for 40% to 60% of the product costs of such items.
Because the quality of imported products is comparable to that of
domestic products, the price increases resulting from the proposed
effluent guidelines will give imported finished products a price
advantage. According to the United States Department of Commerce,
total 1971 imports of all types of fasteners were $108.7 million.
Fastener imports are expected to increase up to 10% due to the
cost increases associated with the proposed 1977 and 1983 effluent
guidelines.
-------
ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY
FIRM SIZE AFTER POLLUTION CONTROL - PROCESS PLANT TYPE C(l)
ALTERNATE A 1983
Establishment Size of Number of Employees
I nc ome -
Expense Category
Sales(2)
Less:
Production and
Operating Expensed)
Earnings Before Taxes
and Interest
Less: Interest on Old
Debt(4)
Interest on New
Debt(s)(5)
Less: Tax Provision
Profit After Taxes
1-4
$60,980
68,619
-7,639
748
4,733
$-13,120
5 - 9
$166,050
184,239
-18,189
1,197
6,514
$-25,900
10 - 19
$323,100
346,107
-23,007
2,244
8,049
$-33,300
20 - 49 50 - 99 100 - 249
$681,000 $1,433,500 $3,306,900
717,873 1,432,265 3,316,432
-36,873 1,235 -9,532
5,032 9,677 28,960
30,855 44,058 96,668
$-72,760 $ -52,500 $ -135,160
Notes: (1) These profit values are applicable to upper bound anodizing and phosphatizing establishments.
(2) These sales figures have been adjusted according to market price of Section VI-B.
(3) These production and operating expenses are those of Exhibit II-3 plus pollution control operating
operating costs.
(4) Old debt interest is calculated for debit value from Exhibit II-4 at 8%.
(5) New debt interest is calculated for the average pollution investment at 10%.
Sources: Exhibit II-3, II-4, V-10.
EXHIBIT VI-26
-------
ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY
FIRM SIZE AFTER POLLUTION CONTROL - PROCESS PLANT TYPE D(l)
ALTERNATE A 1983
Income -
Expense Category
Sales(2)
Less :
Production and
Operating Expense^)
Earnings Before Taxes
and Interest
Less: Interest on Old
Debt(4)
Interest on New
Debt(s)(5)
Less: Tax Provision
Profit After Taxes
1-4
$62,380
71,408
-9,028
748
5,759
$-15,535
Establ
5-9
$169,900
193,367
-23,467
1,197
8,016
$-32,680
ishment Size of
10 - 19
$330,500
361,484
-30,984
2,244
9,472
$-42,700
Number of Employees
20 - 49 50 - 99 100 - 249
$696,600 $1,466,300 $3,413,300
751,825 1,495,753 3,451,944
-55,225 -29,453 -38,644
5,032 9,677 28,960
31,990 45,820 100,386
$-92,247 $ -84,950 $ -90,702
Notes: (1) These profit values are applicable to upper bound cadmium plating establishments.
(2) These sales figures have been adjusted according to market price of Section VI-B.
(3) These production and operating expenses are those of Exhibit II-3 plus pollution
control operating costs,
(4) Old debt interest is calculated for debit value from Exhibit II-4 at 87o.
(5) New debt interest is calculated for the average pollution investment at 107o.
Sources: Exhibit II-3, II-4, V-ll.
EXHIBIT VI-27
-------
ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED NUMBER OF METAL FINISHING ESTABLISHMENTS
BY PROCESS SEGMENT BY TYPE OF DISCHARGE - 1977(1)
Es t ab1 I shine nt
Size by Number
OF Employees
1-4
5-9
10-19
20-49
50-99
100-249
250-500
Total
Cadmium
Dischargers
8
3
5
6
2
—
24
Plating
Dischargers
27
10
18
20
7
2
—
84
Prec lous
Dischargers
12
4
7
8
2
-
1
34
Metal Plating
Muruc ipal
Dischargers
37
15
25
28
8
2
_J
116
Direi
Discharj
27
10
18
20
5
2
1
8_3
Anodizing
:t Municipal
gers Dischargers
89
34
62
65
18
5
2
111
P i c k 1 1 ng
Direct
Dischargers
7
4
4
4
1
1
_r.
21
Municipal
Dischargers
23
12
9
12
4
3
1
64
Phosphat
Direct
Dischargers
3
2
1
1
-
-
^
7
izing
Muni cipal
Dischargers
11
5
5
5
2
2
-
30
Etching
Direct Municipal
19
10
9
9
2
2
^
51
65
31
30
31
6
8
_^
171
Total
Direct
76
33
44
48
12
5
2
220
Munic ipal
252
107
149
161
45
22
4
740
Note (1) Distribution by type of discharge is based on a 77% municipal and 23% direct discharger factor for all process segments in accordance with census data for the industry. The table numbers
reflect applying 7770 rounded throughout.
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ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED NUMBER OF METAL FINISHING
ESTABLISHMENTS BY PROCESS SEGMENT - 1977
Establishment
Size by Number
1-4
5-9
10-19
20-49
50-99
100-249
250 500
Total
Direct
(1)
(I)
1
1
0
_
_
_a
Municipal
(5)
(5)
3
4
9
0
-
O)
Precious Metal Plating
Direct
Dischargers
(1)
(2)
1
1
0
-
1
^
Municipal
Dischargers
(8)
(6)
4
6
2
0
0
0>
CLOSURES AND
GROWTH DUE TO
Anodizing
Direct
Dischargers
(5)
(5)
3
4
1
1
0
it)
Municipal
Dischargers
(16)
(15)
12
11
4
0
I
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BASELINE CONDITIONS - 1967-1977
Pickling
Direct
Dischargers
(1)
1
1
1
0
0
_^
J,
Municipal
Dischargers
(2)
1
0
2
1
1
0
=1
Phosphatizing
Direct
Dischargers
0
1
0
0
-
-
-_
J,
Municipal
Dischargers
(1)
0
1
1
0
0
-
=L
Etching
Direct
Dischargers
(2)
1
1
1
0
0
-Z.
=A
Municipal
Dischargers
(6)
3
3
6
1
2
-ZL
=2
Total
Direct
Dischargers
(10)
(5)
7
8
1
1
-1
=1
Municipal
Dischargers
(38)
v-!2)
23
30
10
3
—
_7
Source: Exhibit 1-15 and Page 2.
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ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE A (1)
Alternate A - 1977
Size of Establishment by Number of Employees
1-4
5-9
10-19
20-49
50-99
100-249
Average Long-Term
Capital Investment
Equity (2)
Lon^-Term Debt (3)
Pollution Control
Debt/Equity (4)
Total Average Capital
Earnings on Capital Be-
fore Taxes and Interest (5)
$17,950
9,350
16,730
$44.030
$ 5,951
$ 20,720
14,960
24,600
$ 68,280
$ 11,557
$ 53,850
28,050
32,600
$114,500
$ 14,102
$141,400
62,900
152,500
$356,800
$ 34,882
$272,000
120,960
218.050
$611,010
$119,177
$ 807,000
362,100
455,050
$1,624,150
$_256JQL6Q
Ratio of Calculated Earn-
ings to Average Capital
.135
.169
.123
.098
.195
.158
Notes: (1) These calculations are applicable to the lower bound anodizing, pickling, phophatizing,
and etching, as well as upper bound pickling and etching. " "' °'
(2) Values for equity are taken from Exhibit II-4.
(3) Values for long-term debt are taken from Exhibit II-4.
(4) Pollution control investment is the average investment cost of Exhibit V-8.
(5) Income before taxes and interest is taken from Exhibit VI-12.
Sources: Exhibit II-4, V-8, VI-12.
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ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE B (1)
Alternate A - 1977
Size of Establishment by Number of Employees
Average Long-Term
Capital Investment
Equity (2)
Long-Terra Debt (3)
Pollution Control
Debt/Equity (4)
Total Average Capital
1-4
$17,950
9,350
21,965
$49,265
5-9 10-19
$ 20,720 $ 53,850
14,960 28,050
30,170 39,700
$ 73,850 $121,600
20-49 50-99
$141,400 $272,000
62,900 120,960
159,600 227,500
$363^9_0_0 $620,460
100-249
$ 807,000
362,100
474,000
$1,643,100
Earnings on Capital Be-
fore Taxes and Interest (5) _$_4.604 _$_6_j334 _$_13,074 $ 34,562 $128,237 j___258.46Q
Ratio of Calculated Earn-
ings to Average Capital .093 .090 .107 .095 .207 .157
Notes: (1) These calculations are applicable to the lower bound cadmium plating establishments,
and precious metal and upper bound precious metal establishments
(2) Values for equity are taken from Exhibit II-4.
(3) Values for long-term debt are taken from Exhibit II-4.
(4) Pollution control investment is the average investment cost of Exhibit V-9.
(5) Income before taxes and interest is taken from Exhibit VI-13.
Sources: Exhibit II-4, V-9, VI-13.
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ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED NUMBER OF METAL FINISHING ESTABLISHMENTS
BY PROCESS SEGMENT BY TYPE OF DISCHARGE - 1983(1)
Establishment _ Cadmium Plating Precious Metal Plating Anodizing ^_ Pickling Phosphatizing Etching
Size by Number Direct Municipal " Direct " Municipal " Direct Municipal Direct"" Municipal ^Direct Municipal —Direct Municipal —Direct Mui
qf_EmEloiee_s_ Dischargers Dischargers Dischargers Dischargers Dischargers Dischargers Dischargers Dischargers Dischargers Dischargers Dischargers Dischargers Dischargers pis!
Total
1-4
5-9
10-19
20-49
50-99
100-249
250-500
Total
21
6
22
23
82
29
9
30
32
1
112
20
6
21
24
6
68
19
72
79
20
6
17
14
12
15
5
3
6
5
5
2
3
29
14
11
2
3
52
48
35
36
37
Direct
.schargers
56
27
53
58
15
8
Municipa
Discharge
191
89
177
191
«
25
Note: (1) Distribution by type of j!i scharge^is^based on a 777. municipal and 237. direct discharger factor for all process segments in accordance with census date for the industry. The table number.
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ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED NUMBER OF METAL FINISHING
ESTABLISHMENTS BY PROCESS SEGMENT - 1983
INCREMENTAL CLOSURES AND GROWTH DUE TO BASELINE CONDITIONS
Establl srmer t
Size 'oy Svipibci
1 -4
5-9
10-19
20-49
50-99
100-249
250-500
Total
Cadmium
Direct
Dischargers
(2)
(1)
1
1
0
1
_^
=a
Plating
Municipal
Dischargers
(6)
(A)
4
3
1
0
^
<£>
Precious Mt
Direct
Dischargers
(3)
(2)
2
2
1
1
J>
J,
^tal Plating
Municipal
Dischargers
(8)
(6)
5
4
1
0
0
iJL>
Anodizing
Direct
Dischargers
(7)
(4)
3
4
1
0
0
a>
Municipal
Dischargers
(21)
(15)
10
14
2
1
2
w
Pickling
Direct
Dischargers
(2)
0
0
0
0
0
1
0)
Municipal
Dischargers
(6)
2
3
3
1
0
0
J
- 1977-1983
Phosphatizing
Direct
Dischargers
(1)
0
1
1
1
-
_^
_2
Municipal
Dischargers
(3)
1
0
0
0
1
_^_
0)
Etching
Direct
Dischargers
(5)
1
2
2
0
1
_;_
_L
Municipal
Dischargers
(17)
4
6
6
2
1
-
JL
Total
Direct
Dischargers
(20)
(6)
9
10
3
3
1
0
Muni c i pa 1
Dischargers
(61)
(18)
28
30
7
3
2
12)
Source- Exhibit Vl-1 and Page 2.
Please note. Parentheses indicate negative.
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ENVIRONMENTAL PROTECTION AGENCY
Average Long-Term
Capital Investment
Equity (2)
Long-Term Debt (3)
Pollution Control
Debt/Equity (4)
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE A (1)
Altei-nate B - 1977
Municipal Discharger
Size of Establishment by Number of Employees
1-4
10,890
5-9
10-19
20-49
50-99
15,860
Total Average Capital $38,190 $ 59,540
20,940
$102,840
131,520
$335,820
186,800
$579,760
100-249
$17,950
9,350
$ 28,720
14,960
$ 53,850
28,050
$141,400
62,900
$272,000
120,960
$ 807,000
362,100
388,680
$1,557,780
Earnings on Capital Be-
fore Taxes and Interest(5) $ 7,017
12.183
18
$ 37.434
$120.357
$ 247,928
Ratio of Calculated Earn-
ings to Average Capital
.180
.200
.180
.110
.208
.159
Notes: (1)
(2)
(3)
(4)
(5)
These calculations are applicable to the lower bound anodizing, pickling, phosphatizing,
and etching, as well as upper bound pickling and etching.
Values for equity are taken from Exhibit II-4.
Values for long-term debt are taken from Exhibit II-4.
Pollution control investment is the average investment cost of Exhibit V-8.
Income before taxes and interest is taken from Exhibit VI-16.
Sources: Exhibit II-4, V-8, VI-16.
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ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE B (1)
Alternate B - 1977
Municipal Discharger
Size of Establishment by Number of Employees
1-4
5-9
10-19
20-49
50-99
100-249
Average Long-Terrn
Capital Investment
Equity (2)
Long- Term Debt (3)
Pollution Control
Debt /Equity (4)
Total Average Capital
Earnings on Capital Be-
fore Taxes and Interest (5)
$17,950
9,350
16,160
$43,460
$ 5,534
$ 28,720
14,960
21,110
$ 64,790
$ 7,878
$ 53,850
28,050
23,490
$105,390
$ 14,193
$141,400
62,900
138,260
$342,560
$ 46,458
$272,000
120,960
199,080
$592,040
$118,185
$ 807,000
362,100
417,120
$1,586,200
$ 257,372
Ratio of Calculated Earn-
ings to Average Capital
.127
.122
.135
.136
.200
.162
Notes: (1)
(2)
(3)
(4)
(5)
These calculations are applicable to the lower bound cadmium plating establishments,
and precious metal and upper bound precious metal establishments.
Values for equity are taken from Exhibit II-4.
Values for long-term debt are taken from Exhibit II-4.
Pollution control investment is the average investment cost of Exhibit V-9.
Income before taxes and interest is taken from Exhibit VI-17.
Sources: Exhibit II-4, V-9, VI-17.
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ENVIRONMENTAL PROTECTION AGENCY
1983 FORECAST OF EMPLOYMENT BY PROCESS
SEGMENT AND ESTABLISHMENT SIZE(l)
Size of
Establishment
by Number
of Employees
1-4
5-9
10-19
20-49
50-99
100-249
250-499
Number of Employees
Cadmium
Plating
38
51
394
910
667
462
Total 2f522
Note: (1) These employment
The methodology
Precious
Metal
Plating
54
71
548
1,274
801
462
489
3.699
levels were
is explained
Anodizing Pickling
124 23
160
1,309
3,123
1,734
1,232
1,221
8T903 "L
obtained using
in Appendix C,
129
224
605
397
680
750
.808
Exhibits
Sources: Exhibit V-4 and Exhibit C-l; Census of Manufacturers,
of Commerce, 1958 through 1972.
Phosphatizing
10
57
98
223
199
510
_
1.097
V-2 and C-l.
Etching
65
328
658
1,527
662
2,040
_
5.280
United States Department
Total
314
796
3,231
7,662
4,460
5,386
2,460
24.309
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ENVIRONMENT PROTECTION AGENCY
1977 FORECAST OF VALUE OF SHIPMENTS
BY PROCESS SEGMENT AND ESTABLISHMENT SIZE(l)
Size of
Establishment Precious
by Number Cadmium Metal
of Employees Plating plating
1 - 4
5 - 9
10 - 19
20 - 49
50 - 99
100 - 249
250 - 499
Total
Note: (1)
($000)
$ 1,320
1,980
7,070
17,710
13,600
7,500
_
$49,180
Values are
employee in
Sources: Exhibit V-6;
of Commerce,
($000)
$ 1,850
2,910
9,825
24,500
15,130
7,490
13,480
$75,185
derived using
Exhibit C-3.
Exhibit C-3;
1958 through
Anodizing Pickling
($000) ($000)
$ 4,370
6,720
24,560
57,880
34,820
29,960
20,220
$178,530
$ 1,090
2,670
4,580
11,400
12,900
17,480
31,380
$81,500
Phosphatizing Etching Total
($000)
$ 510
1,160
2,100
4,250
5,160
8,720
-
$21,900
Exhibit V-6 and average value of
These values are in 1973 dollars
Census of
1972.
Manuf ac tur e s
($000) ($000)
$ 3,040 $ 12,180
6,810 22,250
13,710 61,845
28,560 144,300
20,710 102,320
43,670 114,820
65,080
$116,500 $522,795
shipments per
, United States Department
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ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE A
(1)
Alternate B- 1977
(Direct Discharger)
Size of Establishment
1-4 5-9
Average Long- Term
Capital Investment
Equity (2) $17,950 $ 28,720
Long-Term Debt (3) 9,350 14,960
Pollution Control
Debt/Equity (4) 16,730 24,600
Total Average Capital $44,030 $ 68,280
10-19
$ 53,850
28,050
32,600
$114,500
by Number of
20-49
$141,400
62,900
152,500
$356,800
Employees
50-99 100-249
$272,000 $ 807,000
120,960 362,100
218,050 455,050
$611,010 $1,624,150
Earnings on Capital Be-
fore Taxes and Interest (5) $ 5,841 $ 11,057
$ 13,202
$ 33,082
$115,377 $ 247,160
Ratio of Calculated Earn-
ings to Average Capital .133 .162
.115
.093
.189 .152
Notes: (1) These calculations are applicable to the lower bound anodizing, pickling,
phosphatizing, and etching, as well as upper bound pickling and etching.
(2) Values for equity are taken from Exhibit II-4.
(3) Values for long-term debt are taken from Exhibit II-4.
(4) Pollution control investment is the average investment cost of Exhibit V-8.
(5) Income before taxes and interest is taken from Exhibit VI-20.
Source: Exhibits II-4, V-8, VI-20.
EXHIBIT
M
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ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE B (1)
Alternate B- 1977
(Direct Discharger)
Average Long-Term
Capital Investment
1-4
Size of Establishment by Number of Employees
5-9
Equity (2)
Long-Term Debt (3)
Pollution Control
Debt/Equity (4)
Total Average Capital
$17,950
9,350
21,965
$49,265
$ 28,720
14,960
30,170
$ 73,850
Earnings on Capital Be-
fore Taxes and Interest(5) $ 4.384 $ 6.084
10-19
$ 11.872
20-49
50-99
$ 32.162
$113.737
100-249
$ 53,850
28,050
39,700
$121,600
$141,400
62,900
159,600
$363,900
$272,000
120,960
227,500
$620,460
$ 807,000
362,100
474,000
$1,643,100
$. .247.660
Ratio of Calculated Earn-
ings to Average Capital
.089
.082
.098
.089
.183
151
Notes: (1)
(2)
(3)
(4)
(5)
These calculations are applicable to the lower bound cadium plating establishments,
and precious metal and upper bound precious metal establishments.
Values for equity are taken from Exhibit II-4.
Values for long-term debt are taken from Exhibit II-4.
Pollution control investment is the average investment cost of Exhibit V-9.
Income before taxes and interest is taken from Exhibit VI-21.
Source: Exhibits II-4, V-9, VI-21.
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ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED FIRST YEAR IMPACT ON DOLLAR VOLUME - ALTERNATE B - 1977 ^'
(Millions of Dollars)
Lower Bound ( 2)
Process Segment
Cadmium Plating
Precious Metal Plating
Anodizing
Pickling
Pnosphatizing
Etching
Total
Baseline
Volume
$ 49.2
75.2
178.5
81.5
21.9
116.5
$522.8
Demand
Reduction (4)
$ 1.3
2.0
4.4
2.0
0.5
2.8
$13.0
Revised
Baseline
Volume (5)
$ 47.9
73.2
174.1
79.5
21.4
113.7
$509.8
Upper Bound (3)
Demand
Re duct ion (4)
$ 1.6
2.0
4.7
2.0
0.6
2.8
$13.7
Revised
Baseline
Volume (5)
$ 47.6
73.2
173.8
79.5
21.3
113.7
$509.1
Notes: (1) Baseline Volume, Demand Reduction, and Revised Baseline Volume are given in
constant dollars.
(2) The lower bound estimate assumes that all establishments that are good candidates
for secondary operations, do not have them. The rational used to categorize
establishments into lower and upper bounds is fully documented in Section V-B«
(3) The upper bound estimate assumes that all establishments which are good candid,^i.e^
for secondary operations do have them. The rational used to categorize establish-
ments into lower and upper bounds if fully documented in Section V-B.
(4) Demand Reduction is calculated as follows:
Demand Reduction = Baseline Volume x Elasticity of Demand (-.2) x Percent
Market Price Increase.
(5) Revised Baseline Volume = Baseline Volume - Demand Reduction.
Source: Exhibit VI-6 and Table VI-14.
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ENVIRONMENTAL PROTECTION AGENCY
Process Segment
Jsdmiuni Plating
Precious Metal Plating
Anodiz ing
Pi cklmg
Phosphatizing
Etching
Total
1983
Baseline
Vo lume
$ 65.6
97.7
235.5
100.5
3J.4
154.3
$687.0
ESTIMATED FIRST YEAR IMPACT ON DOLLAR
Demand
Incremental
Reduction from 1977(4)
$ .4
.6
1.4
.5
.2
1.0
$4.1
(Millions of Dollars)
Lower Bound ^ '
Reduction
Reduction from 1983
Baseline Forecast (5)
$ 1.8
2.7
5.9
2.5
.8
3.9
$17.6
VOLUME -
Revised
Baseline
Volume (6)
$ 63.8
95.0
229.6
98.0
32.6
150.4
$669.4
1983 (!)
Demand
Incremental
Reduction from 1977(4)
$ .5
.6
1.6
.5
.2
1.0
$4.4
Upper Bound'-')
Reduction
Reduction from 1983
Baseline Forecast (5)
$ 2.1
2.7
6.4
2.5
.9
3.9
$18.5
Revised
Baseline
Volume (6)
$ 63.5
95.0
229.1
98.0
32.5
150.4
$668.5
Notes' (1) Baseline Volume, Demand Reduction, and Revised Baseline Volume are given in 1973
constant dollars.
(2) The lower bound estimate assumes that all establishments that are good candidates
for secondary operations, do not have them. The rational used to categorize
establishments into lower and upper bounds if fully documented in Section V-B.
(3) The upper bound estimate assumes that all establishments which are good candidates
for secondary operations do have them. The rational used to categorize establish-
ments into lower and upper bounds if fully documented in Section V-B.
(4) Incremental Reduction from 1977 is calculated as follows:
Reduction from 1983 Baseline Forecast - Reduction from 1977 Baseline Forecast (Alternate A) = Incremental Reduction from 1977 Baseline Forecast.
(5) Demand Reduction from 1983 Baseline Forecast is calculated, as follows:
Demand Reduction = Baseline Volume x Elr-sticity of Demand (-.2) x Percent Market Price Increase.
(6) Revised Baseline Volume = Baseline Volume - Demand Reduction.
Source: Exhibit VI-6 and Table VI-14.
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ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE A (1)
Alternate A - 1983
Average Long-Term
Capital Investment
Equity (2)
Long-Term Debt (3)
Pollution Control
Debt/Equity (4)
Total Average Capital
Earnings on Capital Before
Taxes and Interest (5)
1-4
31,100
$58.100
j-1,412
Size of Establishment by Number of Employees
5-9
10-19
45,730
60,600
$142.500
20-49
$17,950
9,350
$ 28,720
14,960
$ 53,850
28,050
$141,400
62,900
283,500
$487,800
j-13,446 $-33.018
50-99
405,350
100-249
$272,000 $ 807,000
120,960 362,100
892,320
$798.310 $2.061.420
$ 7JL20 .$ 29^39.2
Ratio of Calculated Earn-
ings to Average Capital
Less than 0 Less than 0 Less than 0 Less than Q
,009
.014
Notes: (1)
(2)
(3)
(4)
(5)
These calculations are applicable to the lower bound anodizing, pickling, phosphatizing,
and etching, as well as upper bound pickling and etching.
Values for equity are taken from Exhibit II-4.
Values for long-term debt are taken from Exhibit II-4.
Polluation control investment is the average investment cost of Exhibit V-8.
Income before taxes and interest is taken from Exhibit VI-24.
Sources: Exhibit II-4, V-8, VI-24.
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ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL
FOR THE METAL FINISHING INDUSTRY - PROCESS PLANT TYPE B (1)
Alternate A -
- 1983
Size of Establishment
Average Long-Term
Capital Investment
Equity (2)
Long-Term Debt (3)
Pollution Control
Debt/Equity (4)
Total Average Capital
1-4
$17,950
9,350
57,590
$84.890
5-9
$ 28,720
14,960
80,160
$123.900
10-19
$ 53,850
28,050
94,720
$176.620
by Number of
20-49
$141,400
62,900
319,900
$524.200
Employees
50-99
$272,000
120,960
458,200
$851.160
100-249
$ 807,000
362,100
1,003,860
$2,172.000
Earnings on Capital Before
Taxes and Interest (5) $-9,028
$-23,467
i-30.984
$-51,018
$-29.453 j. -3.8,644
Ratio of Calculated Earn-
ings to Average Capital Less than 0 Less than 0 Less than 0 Less than 0 Less than 0 Less than 0
Notes: (1) These calculations are applicable to the lower bound cadmium plating establishments,
and precious metal and upper bound precious metal establishments.
(2) Values for equity are taken from Exhibit II-4.
(3) Values for long-term debt are taken from Exhibit II-4.
(4) Pollution control investment is the average investment cost of Exhibit V-9.
(5) Income before taxes and interest is taken from Exhibit VI-25.
Sources: Exhibit II-4, V-9, VI-25.
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ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING
FIRM SIZE AFTER POLLUTION CONTROL - PROCESS PLANT
SHOP BY
TYPE A(l)
ALTERNATE A 1977
Establishment Size by Number of
Sales (2)
Less :
Production and
Operating Expense (3)
Profit Before Taxes and
Interest
Less:
Less :
Profit
Interest on Old
Debt (4)
Interest on New
Debt(s)(5)
Tax Provision
After Taxes
1 - 4
$60,400
54,449
5,951
748
1,673
890
$ 2,640
5 9
$164,000
153,043
11,557
1,197
2,460
1,980
$ 5,820
10 19
$320,300
306,198
14,102
2,244
3,260
3,000
$ 5,600
20 - 49
$675,000
640,118
34,882
5,032
15,250
6,800
$ 8,600
50 -
$1,420
1,301
119
9
21
41
$ 45
Employees
99
,900
,723
,177
,677
,805
,500
,000
100 -
$3,307
3,051
256
28
48
86
$ 93
249
,500
,440
,060
,960
,000
,000
,100
250 -
$7,386
6,948
438
120
152
$ 165
499
,800
,000
,800
-
,000
,600
,400
Notes: (1) These values apply to low estimates for anodizing, pickling, phosphatizing, etching and high estimates
of pickling and etching.
(2) These sales figures have been adjusted according to market price increase of Section VI-B.
(3) These production and operating expenses are those of Exhibit II-3 plus pollution control operating costs.
(4) Old debt interest is calculated for debit value from Exhibit H-4 at 8%.
(5) New debt interest is calculated for the average pollution investment at 10%.
Sources: Exhibit II-3, Exhibit II-4 and Exhibit IV-8.
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ENVIRONMENTAL PROTECTION AGENCY
PROFIT REALIZATION OF A TYPICAL METAL FINISHING SHOP BY
FIRM SIZE AFTER POLLUTION CONTROL - PROCESS PLANT TYPE B(l)
ALTERNATE A - 1977
Income-Expense Category
Sales (2)
Less :
Profit
Less :
Less:
Production and
Operating
Expense (3)
Before Tax and Interest
Interest on old debt (4)
Interest on new debt (5)
Tax Provision
1-4
$61,200
56,596
$ 4,604
748
2,196
370
5-9
$166,600
159,966
$ 6,634
1,197
3,017
530
10-19
$324,300
311,228
$ 13,072
2,244
3,970
1,510
20-49
$683,400
648,838
$ 34,562
5,032
15,960
6,500
50-99
$1,438,000
1,319,763
$ 128,237
9,677
24,000
40,590
100-249
$3,348,700
3,089,240
$ 258,460
28,960
50,000
86,600
2bU-4''9
$7,478,700
7,043,300
$ 435,400
-
125,000
149,000
Profit After Tax
$ 1,290 $ 1,890
$ 5,350
$ 7,070
$ 43,970
$ 93,100
$ 161,400
Note: (1) These estimates apply for low estimates of cadmium and precious metal plating and high estimates of
precious metal plating.
(2) These sales figures have been adjusted according to market price increases of Section VI-B.
(3) These production and operating expenses are those of Exhibit II-3 plus pollution control operating costs.
(4) Old debt interest is calculated for debt values from Exhibit II-4 at 8%.
(5) New debt interest is calculated for the average pollution investment at 107o.
Source: Exhibit II-3, II-4, IV-9.
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ENVIRONMENTAL PROTECTION AGENCY
SUMMARY OF CALCULATED EARNINGS TO AVERAGE CAPITAL RATIOSC1)
(ALTERNATE A - 1977)
Lower Bound
Upper Bound
Establishment
Size by Number
of Employees
1-4
5-9
10-19
20-49 (with evaporator)
20-49 (without evaporator)
50-99
100-249
Cadmium
Precious Metal
Plating
.093
.090
.107
.095
.160
.207
.157
Anodizing, Pickling,
Phosphatizing,
Etching
.135
.169
.123
.098
.240
.195
.158
Cadmium
Plating
.048
.050
.095
.094
.220
.186
.160
Precious
Metal
Plating
.093
.090
.107
.095
.160
.207
.157
Anodizing,
Phosphatizing
.054
.068
.108
.096
.230
.191
.140
Pickling,
Etching
.135
.169
.123
.098
.240
.195
.158
Note: (1) These values summarize the data presented in Exhibit VI-30, VI-31, VI-32, VI-33.
Source: Exhibit VI-30, VI-31, VI-32, VI-33.
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Establishment
Size by Number
of Employees
1-4
5-9
10-19
20-49
50-99
100-249
ENVIRONMENTAL PROTECTION AGENCY
SUMMARY OF CALCULATED EARNINGS TO AVERAGE CAPITAL RATIOSC1)
(Alternate B - 1977) - Municipal Dischargers
Cadmium
Precious Metal
Plating
.127
.122
.135
.136
.200
.162
Lower Bound
Anodizing, Pickling,
Upper Bound
Phosphatizing,
E tching
.180
.200
.180
.110
.208
.159
Cadmium
Plating
.078
.081
.119
.107
.197
.166
Precious
Metal
Plating
.127
.122
.135
.136
.200
.162
Anodizing,
Phosphatizing
.115
.110
.142
.108
.202
.165
Pickling,
Etching
.180
.200
.180
.110
.208
.159
Note: (1) The values in this table summarize the data presented in Exhibits VI-34, VI-35, VI-36, VI-37.
Source: Exhibit VI-34, VI-35, VI-36, VI-37.
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ENVIRONMENTAL PROTECTION AGENCY
SUMMARY OF CALCULATED EARNINGS TO AVERAGE CAPITAL RATIOSC1)
(Alternate B - 1977) - Direct Dischargers
Lower Bound
Establishment Cadmium
Size by Number Precious Metal
of Employees Plating
1-4
5-9
10-19
20-49
20-49
50-99
100-249
(with evaporator)
(without
evaporator)
.089
.082
.098
.089
.153
.183
.151
Anodizing, Pickling,
Phosphatizing,
Etching
.133
.162
.115
.093
.161
.189
.152
Upper Bound
Cadmium
Plating
.044
.046
.089
.089
.151
.180
.154
Precious
Metal
Plating
.089
.082
.098
.089
.153
.183
.151
Anodizing,
Phosphatizing
.049
.061
.064
.090
.152
.183
.152
Pickling ,
Etching
.133
.162
.115
.093
.161
.189
.152
Note: (1) These values summarize the data presented in Exhibits VI-38, VI-39, VI-40, VI-41.
Source: Exhibits VI-38, VI-39, VI-40, VI-41.
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ENVIRONMENTAL PROTECTION AGENCY
SUMMARY OF CALCULATED EARNINGS TO AVERAGE CAPITAL RATIOS
(1)
(Alternate A - 1983)
Lower Bound
Establishment
Size by Number
of Employees
1-4
5-9
10-19
20-49 (with evaporator)
20-49 (without
evaporator)
50-99
100-249
Cadmium
Precious Metal
Plating
less than 0
less than 0
less than 0
less than 0
less than 0
.007
less than 0
Anodizing, Pickling,
Phosphatizing ,
Etching
less than 0
less than 0
less than 0
less than 0
less than 0
.009
.041
Upper Bound
Cadmium
Plating
less than 0
less than 0
less than 0
less than 0
less than 0
less than 0
less than 0
Precious
Metal
Plating
less than 0
less than 0
less than 0
less than 0
less than 0
.007
less than 0
Anodizing,
Phosphatizing
less than 0
less than 0
less than 0
less than 0
less than 0
.001
less than 0
Pickling,
Etching
less than 0
less than 0
less than 0
less than 0
less than 0
.009
.014
Note: (1) These values summarize the data presented in Exhibits VI-42, VI-43, VI-44, VI-45.
Source: Exhibits VI-42, VI-43, VI-44, VI-45.
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ENVIRONMENTAL PROTECTION AGENCY
RATIO OF EARNINGS TO AVERAGE CAPITAL OF ABOVE AVERAGE METAL FINISHING ESTABLISHMENTS (1)
(Alternate A - 1977)
Lower Bound
Establishment Size
by Number of Employees
1-4
5-9
10-19
20-49
Earnings
Ratio
Earnings
Ratio
Earnings
Ratio
Earnings
Ratio
Cadmium
Precious Metal
Plating
$ 9,977
.202
$12,261
.288
$41,544
.341
$94,562
.260
Anodizing, Pickling
Phosphatizing,
Etching
$11,324
.257
$26,187
.382
$42,572
.371
$94,882
.266
Cadmium
Plating
$ 8,150
.139
$19,328
.211
$41,109
.309
$95,230
.253
Upper Bound
Precious
Metal
Plating
$ 9,977
.202
$21,261
.288
$41,544
.341
$94,562
.260
Anodizing,
Phosphatizing
$ 8,237
.156
$20,401
.241
$37,644
.301
$95,620
.258
Pickling,
Etching
$11,324
.257
$26,187
.382
$42,57:?
.371
$94,882
.266
Note: (1) These values were calculated adding a 10% sales increase directly to the profit recorded in Exhibit VI-30
through VI-33.
Source: Exhibit II-l, VI-30, VI-31, VI-32, VI-33.
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ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL FOR THE
ABOVE AVERAGE METAL FINISHING ESTABLISHMENTS -
DIRECT DISCHARGERS - ALTERNATE B-1977(l)
Lower Bound
Establishment Size by
Number of Employees
1-4
5-9
10-19
20-49
Earnings
Ratio
Earnings
Ratio
Earnings
Ratio
Earnings
Ratio
Cadmium Precious
Metal Plating
$ 9,757
.198
18,714
.253
40,342
.332
92,162
.253
Anodizing, Pickling,
Phosphatizing, Etching
$11,214
.255
23,657
.346
41,602
.363
93,082
.260
Uouer Bound
Cadmium
Plating
$ 7,969
.137
16,828
.183
40,309
.303
93,430
.248
Precious
Metal
Plating
$ 9,757
.198
18,714
.253
40,342
.332
92,162
.253
Anodizing,
Phosphatizing
$ 7,957
.151
17,851
.211
36,544
.292
93,230
.252
Pickling
Etching'
$11,214
.255
23,657
.346
41,602
.363
93,082
.260
Note: (1) These values were calculated adding a 10% sales increase directly to the profit shown in Exhibits VI-38 through VI-41.
Source: II-l, VI-38, VI-39, VI-40, VI-41.
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Establishment Size by
Number of Employees
1-4
5-9
10-19
20-49
(with
evaporator)
Earnings
Ratio
Earnings
Ratio
Earnings
Ratio
Earnings
Ratio
20-49 Earnings
(without Ratio
evaporator)
50-99
100-249
Earnings
Ratio
Earnings
Ratio
ENVIRONMENTAL PROTECTION AGENCY
RATIO OF CALCULATED EARNINGS TO AVERAGE CAPITAL FOR THE
ABOVE AVERAGE METAL FINISHING ESTABLISHMENTS(1)
Lower Bound
Cadmium Precious
Metal Plating
$ 763
.011
-2,427
less than 0
3,594
.023
18,502
.037
37,720
.087
132,031
.157
289,200
.137
Anodizing, Pickling,
Phosphatizing, Etching
$ 3,961
.068
7,820
.087
15,024
.105
26,980
.055
45,960
.110
133,420
.167
323,392
.156
Cadmium
Plating
$ 3,655
less than 0
-8,831
less than 0
-2,514
less than 0
4,875
.009
23,070
.050
96,847
.113
255,356
.117
Upper Bound
Precious
Metal
Plating
$
763
.011
-2,427
less than 0
3,594
.023
18,502
.037
37,720
.087
132,031
.157
289,200
.137
Anodizing,
Phosphatizing
$ -2,266
less than 0
-3,559
less than 0
5,463
.033
23,127
.004
41,600
.093
127,535
.153
284,468
.133
Note: (1) Use values were calculated adding a 10% sales increase directly to the profits shown in Exhibits VI-42 through VI-45.
Source: Exhibits II-l, VI-42, VI-43, VI-44, VI-45.
Pickling
Etching
$ 3,961
.068
7,820
.087
15,024
.105
26,980
.055
45,960
.110
133,420
.167
323,392
.156
(TO
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ENVIRONMENTAL PROTECTION AGENCY
CALCULATED EARNINGS TO AVERAGE CAPITAL RATIO OF ABOVE
(Alternate A -
AVERAGE METAL FINISHING ESTABLISHMENTS (1)
1983)
Lower Bound
Establishment Size
by Number of Employees
1-4
Profit
Ratio
5-9
10-19
20-49
Profit
Ratio
Profit
Ratio
Profit
Ratio
Cadmium
Precious Metal
Plating
$ 2,373
.035
$ 2,000
.020
$12,108
.078
$36,502
.073
Anodizing, Pickling,
Phosphatizing, Cadmium
Etching Plating
$ 5,351
.092
$12,065
.135
$34,811
.244
$78,018
.160
$-1,828
Less than 0
$-3,907
Less than 0
$ 7,202
.040
$16,782
.032
Upper Bound
Precious
Metal
Plating
$ 2,373
.035
$ 2,000
.020
$12,108
.078
$36,502
.073
Anodizing,
Phosphatizing
$ -758
Less than 0
$ 538
.005
$13,470
.083
$39,927
.078
Pickling,
Etching
$ 5,351
.092
$12,065
.135
$34,811
.244
$78,018
.160
Note: (1) These values were calculated adding a 10% sales increase directly to the profit recorded in Exhibit X-33
through X-36.
Source: Exhibit V-l, X-33, X-34, X-35, X-36.
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ENVIRONMENT PROTECTION AGENCY
CASH FLOW/DEBT RETIREMENT ANALYSIS
ALTERNATE A-1977
T-.-,,,-,^*- ueot KeLireineiii-
Earnings Interest ^ __;_.... ^ — : r~T
Effluent
Guideline
Cadmium and
Precious
Metal Plat-
ing Lower
Bound
Anodizing,
Pickling,
Phosphatiz-
ing and
Etching
Lower Bound
and Upper
Bound for
Pickling and
Etching.
Notes: (1)
(2)
(3)
(4)
(5)
'$,
(7)
(8)
(9)
UO)
(11)
(12)
(13)
(141
(15)
(16)
(17)
Employee Before Pollution Profits uepieuj.ai.iuii !«..,-„«..,.
Size Interest and Present Control Before Estimated Net Treatment Cash Present sys'em%
Class Taxes(l) Debt (2) Debt(3) Taxes (4) Taxes (5) Prof its (6) Present (7) System(8) Flow(?l Debt (10) Debt (11) Total Debt
1-4 $ 210 $ 748 $ 2,803 $ (2,621) $ - $ (2,621) ? 2,800 $ 8,786 $ 8,975 $ 935
5-9 600 1,197 3,850 (4,447) - (4,447) 4,300 12,068 11,921 1,496
10-19 5 134 2,244 5,066 (2,176) - (2,176) 9,000 15,880 22,704 2,805
20-49(14) 2,642 5,032 20,365 (22,755) - (22,755) 15,500 63,840 56,586 6,290
20-49(15) 14,942 5,032 11,050 (1,140) - (1,140) U-™ 34,640 49,000 ,1-^2
50-99 82 737 9,677 29,029 44,031 14,635 29,396 36,000 91,000 156,396 \l<™
100-249 163 660 28,960 60,482 74,218 29.125 45,093 60,000 189,600 294 693 35>,?10
250-499 N/A N/A - N?A N/A N/A N/A - N/A N/A
1-4 $ 2,605 $ 748 $ 2,135 $ (278) - $ (278) $ 2,800 $ 6,692 $ 9,214 $ 935
5,9 6 637 1,197 3,139 2,301 $ 506 1,795 4,300 9,840 15,935 1,496
10 19 7 582 2,244 4,160 1,178 259 919 9,000 13,040 22,959 2,805
20-49 4*382 5,032 19,459 (20,109) - (20,109) 15,500 61,000 56,391 6,290
20-49 16,682 5,032 10,144 1,506 331 1,175 15,500 31,800 48,4/5 6,290
50-99 75 567 9,677 27,823 38,067 11,772 26,295 36,000 87,220 149,515 12,096
100-249 165,050 28,960 58,064 78,026 30,952 47,074 60,000 182,020 289,094 36 210
250-499 N/A N/A - N/A N/A N/A N/A - N/A N/A
Profit Before Taxes and Interest is calculated in Exhibits VI-12 through VI-29 with depreciation adjusted from an economic
$ 8,786 $ 9,721
12,068 13,564
15,880 18,685
63,840 70,130
34,640 40,930
91,000 103,096
189,600 225,810
N/A
$ 6,692 $ 7,627
9,840 11,336
13,040 15,845
61,000 67,290
31,800 38,090
87,220 99,316
182,020 218,030
N/A
Hieh Profit Firms
Cash
Coverage (12) Flow(13) Coverage (12)
.92
.88
1.21
.81
1.20
1.52
1.31
N/A
1.21
1.41
1.45
.84
1.27
1.51
1.33
N/A
life of ten years to a tax life
$ 13,171
24,308
45,389
105,257
(16)
(17)
(17)
N/A
$ 13,466
27,346
43,957
103,743
(16)
(17)
(17)
N/A
of five years.
1.35
1.79
2.43
1.50
(16)
(17)
(17)
N/A
1.77
2.41
2.77
1.54
(16)
(17)
(17)
N/A
Interest on present debt is at 87. per annum on the debt as shown in Exhibits VI-12 through VI-29.
Based on amortization over five years, 26.38 of the debt will be paid each year if payments are made yearly and the interest rate is 10/.. For the average year interest
will be 6.387. and principal retirement 207.. These data are used in the table. In actuality first year payments will have more interest and less principal retirement
and last year payments the reverse. If interest is paid annually and principal retired in equal amounts, total interest paid will be lower averaging 5/. on total investment;
but cash flow requirements would be higher in initial years.
Profits before tax are profits before taxes and interest less interest.
Estimated taxes are based on a 227. on the first $25,000 and 487. thereafter.
Net profits are profits before taxes less taxes.
"resent depreciation is estimated to equal 107. of net fixed assets shown by the Robert Morris survey.
Treatment system depreciation is based on a fast tax write-off for pollution control equipment in accordance with Section
period and the investment tax credit would not fit well with the amortization requirements of five years and in some cases
Total Cash Flow equals Net profits plus depreciation.
169 of the Internal Revenue Code. A longer write-off
income may not be high enough to utilize the full credit.
Present Debt is as shown in Exhibit VI-30 through VI-45. Retirement is estimated to be 107. per year.
Treatment system debt is based on financing 1007. of the pollution control treatment system requirements. This is an upper bound estimate of
financing is likely to require some equity participation in financing. For small firms this is likely to require use of personal assets.
Coverage is the ratio of Cash flow to debt retirement.
High profit firm cash flow represents those firms with a geographic or specialization permitting higher prices and higher
A similar analysis has been made to develop this cash flow estimate.
With use of evaporator.
Without use of evaporator costing $146,000. Operating costs raised $2,300 to compensate.
Similar to the above estimate for 20-49, with more favorable coverage.
These size shops are viable without consideration of high profit firms. Also, because of their size they are less likely
isolated from competition.
cash flow requirements. Typical
profits. These firms have been given a 107. price
to be in geographic
or specialty
market segments
premium.
partially
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ENVIRONMENT PROTECTION AGENCY
CASH I LOW/DEBT RETIREMENT ANALYSIS
ALTERNATE A- 1977
tarnings
f.filuent Employee Before
tui.'pline Size Interest and
Condition Class Taxps(l)
Cadiniun
Plating
Anodizing
and Phosphati-
zing Upper
Bound
1-4 $
5-9
10-19
20-49(14)
20-49(15)
50-99
100-249
250-499
1-4 *
5-9
10 19
20-49( 14)
20-49(15)
50-99
100-249
250-499
(3,411)
(3,926)
2,449
829
13,122
69,435
171,076
N/A
-2,228
-1,417
4,813
2,435
17,035
72,677
136,268
N/A
Pollution
Present Control
Debt (2) Debt (3)
$ 748
1,197
2,244
5,032
5,032
9,677
28,960
N/A
S 748
1,197
2,244
5 ,032
5,032
9 677
28,960
N/A
$ 3,929
5,468
6,461
21,820
12,638
31,253
69,910
$ 3,249
4,586
5,526
21,179
11,864
30,241
62,902
Profits
Before
Taxes (4)
$ (8,099)
(10,591)
(6,256)
(26,023)
(4,548)
28,505
72,206
N/A
$ -6,225
-7,200
-2,957
-23,776
139
32,759
44,406
N/A
Depreciation
Estimated
Taxes (5)
-
_
-
-
$ 7,182
28,360
N/A
$ -
_
_
31
9,224
14,814
N/A
Net
Prof its (6)
$ (8,099)
(10,591)
(6,256)
(26,023)
(4,548)
21,323
43,846
N/A
$ -6,225
-7,200
-2,957
-23,776
108
23,535
29,592
N/A
Present (7)
$ 2,800
4,300
9,000
15,500
15,500
36! 000
60,000
N/A
$ 2,800
4,300
9,000
15,500
15,500
36J 000
60,000
N/A
Treatment
System(8)
$ 12,393
17,248
20,382
68,832
39,616
98,592
204,768
-
$ 21,104
33,848
50,125
148,110
37,190
251,984
664,824
Cash
Flow(9)
$ 7,094
10,957
23,156
58,309
50,568
155,915
308,614
N/A
$ 17,679
30,948
56,125
139,834
52,798
311,519
754,416
N/A
Present
Debt (10)
$ 935
1,496
2,805
6,290
6,290
12,096
36,210
N/A
$ 935
1,496
2,805
6,290
6,290
12,096
36,210
N/A
Treatment
System
Debt(ll)
$ 12,393
17,248
20,382
68,832
39,616
98,592
204,768
-
$ 21,104
33,848
50,082
148,110
37,190
251,984
664,824
High Profit Firms
Cash
Total Debt Coverage (12) Flow(13) Coverage (12)
$ 13,328
18,744
23,189
75,122
45,906
110,688
240,978
N/A
$ 22,039
35 , 344
52,887
154,400
43,480
264,080
701,034
N/A
.53
.58
1.00
.78
1.10
1.41
1.28
N/A
.80
.87
1.06
.91
1.21
1.18
.08
B/A
$ 12,478
25,587
51,626
128,832
(16)
(17)
(17)
N/A
$ 23,050
45,578
84,595
199,834
(16)
(17)
(17)
N/A
.94
1.37
2.22
1.71
(16)
(17)
(17)
N/A
1.05
1.29
1.60
1.29
an
(17)
N/A
Notes. (1) Profit Before Taxes and Interest is calculated in Exhibits VI-12 through VI-29 with depreciation adjusted from an economic life of ten years to a tax life of five years.
<">) Interest on present debt is at 8% per annum on the debt as shown in Exhibits VI-12 through VI-29.
(3) Based on amortization over five years, 26.38 of the debt will be paid each year if payments are made yearly and the interest rate is 107.. For the average year interest
will be 6.38% and principal retirement 20%. These data are used in the table. In actuality first year payments will have more interest and less principal retirement
and last year payments the reverse. If interest is paid annually and principal retired in equal amounts, total interest paid will be lower averaging 5% on total investment,
but cash flow requirements would be higher in initial years.
(4) Profits before tax are profits before taxes and interest less interest.
(5) Estimated taxes are based on 2270 on the first $25,000 and 48% thereafter.
(6) Net profits are profits before taxes less taxes.
(7) Present depreciation is estimated to equal 1070 of net fixed assets shown by the Robert Morris survey.
(8) Treatment system depreciation is based on a fast tax write-off for pollution control equipment in accordance with Section 169 of the Internal Revenue Code. A longer write-off
period and the investment tax credit would not fit well with the amortization requirements of five years and in some cases income may not be high enough to utilize the full creJit.
(9) Total Cash Flow equals Net profits plus depreciation.
(10) Present De"bt is as shown in Exhibit VI-30 through VI-45. Retirement is estimated to be 1070 per year.
(ID Treatment system debt is based on financing 1007D of the pollution control treatment system requirements. This is an upper bound estimate of cash flow requirements. Typical
financing is likely to require some equity participation in financing. For small firms this is likely to require use of personal assets.
(12) Coverage is the ratio of Cash flow to debt retirement.
(13) High profit firm cash flow represents those firms with a geographic or specialization permitting higher prices and higher profits. These firms have been given a 107= price premium.
A similar analysis has been made to develop this cash flow estimate.
(14) With use of evaporator.
(15) Without use of evaporator costing $146,000. Operating costs raised $2,300 to compensate.
(16) Similar to the above estimate for 20-49, with more favorable coverage.
(17) These size shops are viable without consideration of high profit firms. Also, because of their size they are less likely to be in geographic or specialty market segments partially
i<;olat"pd from rnrnppt~i finn
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ENVIRONMENT PROTECTION AGENCY
Effluent
Guideline
Condition
Cadmium and
Precious
Metal Pip-
ing Lower
Bound
Anrxlizi njj ,
''ickling,
Phosphatiz-
ing, and
Etching
Lower Bound
and Upper
Sound for
Pi-kliag nn'1
Ltching.
Notes. (1)
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CASH FLOW/DEBT RETIREMENT ANALYSIS
Alternate A - 1983
jra™,-,,«c Interest
E^ninyoo uofn^o Pollution Profits Depreciation
Class Taxes!1) Debt(2) Debt (3) Taxes(4) Taxes(5) Profits(6) Present(7) System(8)
1 tt $ (12,775) S 748 $ 5,208 $ (18,731) $ - $ (18,731) $ 2,800 $ 16,320
5 9 (i7,021) 1,197 7,157 (38,418) - (38,418) 4,300 22,436
10-19 (39,663) 2,244 9,416 (51,323) - (51,323) 9,000 36,520
20-49(14) (100,838) 5,032 37,858 (143,728) - (143,728) 15,500 119,680
20-49(15) (39,604) 5,032 22,100 (66,736) - (66,736) 15,500 89,400
50-99 (82,941) 9,677 53,970 (146,588) - (146,588) 36,000 169,183
100249 (190,740) 28,960 118,600 (338,300) - (338,300) 60,000 367,340
250-499 N/A N/A - N/A N/A N/A N/A
1-4 $ (7,585) $ 748 $ 3,968 $ (12,301) $ - $ (12,301) $ 2,800 $ 12,440
5-9 (13,331) 1,197 5.835 (20,363) - (20,363) 4,300 18,290
10-19 (25,567) 2,244 7,730 (35,541) - (35,541) 9,000 24>?4°
20-49 (53,682) 5,032 36,175 (94,889) - (94,889) 15,500 113,400
20-49 (29,778) 5,032 26,548 (61,538) - (61,538) 15,500 84,200
50-99 (73,070) 9,677 51,723 (134,470) - (134,470) 36,000 1"'14°
100-249 (149,072) 28,960 113,860 (291,892) - (291,892) 60,000 356,800
250-499 N/A N/A - N/'A N/A N/A N/A
Debt Retirement
Treatment
Cash
Flcw(9)
$ 389
(2,054)
(5,803)
(8,548)
38,164
57,595
89,040
N/A
$ 2,939
2,221
(2,301)
34,011
38,342
63,670
12N;r
P
resent
Debt (10)
$
?
Profit Before Taxes and Interest is calculated in Exhibits VI-12 through VI-29 with depreciation adjusted from an
interest on present debt is at 8% per annum on the debt as shown in Exhibits VI-12 through VI-29.
Based on amortization over five years, 26.38 of the debt will be paid each year if payments are made
will be 6.3870 and principal retirement 20%. These data are used in the table. In actuality first ye
yearly and
ar payment
935
1,496
2,805
6,290
6,290
12,096
36,210
N/A
935
1,496
2,805
6,290
6,290
12,096
36,210
N/A
economic
the intere
S 1
and last year payments the reverse. If interest is paid annually and principal retired in equal amounts, total
(4)
(5)
(7)
(8)
but cash flow requirements would be higher in initial years.
Profits before tax are profits before taxes and interest less interest.
Estimated taxes are based on a 2270 on the first $25,000 and 487D thereafter.
Present depreciation is estimated to equal 10Z of net fixed assets shown by the Robert Morris survey.
Treatment system depreciation is based on a fast tax write-off for pollution control equipment in ace
ordance wi
period and the investment tax credit would not fit well with the amortization requirements of five years and in
(Q)
(10)
(11)
(12)
(13)
{ 14^
(15)
Total Cash Flow equals Net profits plus depreciation.
Present Debt is as shown in Exhibit VI-30 through VI-45.
Treatment system debt is based on financing 10070 of the pollution control treatment system requirements. This
th
tfill have
interest
Section
some cases
i
financing is likely to require some equity participation in financing. For small firms this is likely to require
Coverage is the ratio of Cash flow to debt retirement.
High profit firm cash flow represents those firms with a geographic or specialization permitting higher prices
A similar analysis has been made to develop this cash flow estimate.
With use of evaporator.
Without use of evaoorator costing $146,000. Operating costs raised $2,300 to compensate.
System
Debt(ll)
$ 16,320
22,436
36,520
118,680
118,680
169,183
371,800
$ 12,440
18,290
24,240
113,400
84,200
162,140
356 , 800
Total Debt
$ 27,255
23,932
39,325
124,970
95,960
187,270
408,010
N/A
$ 13,375
19,686
27,045
119,690
90,490
174,236
393,010
N/A
life of ten years to
st rate is
more inte
paid will
169 of the
107.. For
rest and le
High Profit
Cash
Firms
Coverage (12) Flow(13) Coverage (12)
0.014
less than
less than
less than
0.397
0.307
0.218
N/A
0.219
0.113
less than
0.284
0.423
0.365
0.317
N/A
a tax life
the average
ss principa
be lower averaging 57,
Internal R
evenue Code
$ 7,212
0 12,206
0 22,667
0 51,452
98,164
183,895
383.040
N?A
$ 8,312
14,820
0 26,169
94,010
98,342
268,966
418,500
N/A
of five years.
year interest
1 retirement
on total investme
A longer write-
income may not be high enough to utilize the full
0
0
0
0
1
.264
.510
.576
.411
.022
0.981
0.938
N/A
0.621
0.752
0.968
0.705
1.086
1.543
1.064
N/A
nt
of
j
f
credit.
s an upper bound estimate of cash flow requirements. Typical
use of personal assets.
and higher
profits.
These firms
have been
given a 1078 price
pr
emium.
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ENVIRONMENT PROTECTION AGENCY
CASH FLOW/DEBT RETIREMENT ANALYSIS
ALTERNATE A - 1983
Guidr line
Condition
Plating
Upper
Anodizing
phatizing
R rl
Profits
Size Interest and
Class Taxes(l)
1-4 $ (20,545)
5-9 (39,543)
10-19 (49,891)
20-49(14) (118,598)
20-49(15) (51,682)
50-99 (120,950)
100-249 (239,376)
250-499 N/A
1_4 $ (17,101)
5-9 (31,216)
10-19 (39,070)
20-49 (98,583)
20-49 (37,072)
50 99 (86,875)
100-249 (176,868)
250-499 N/A
Interest De
Present
Debt (2)
$ 748
1,197
2,244
5,032
5,032
9,677
28,960
N/A
$ 748
1,197
2,244
5,032
5,032
9,677
28,960
N/A
Pollution
Control
Debt(3)
$ 7,349
10,228
12,087
30,866
40,819
58,466
128,093
-
$ 6,039
8,311
10,270
39,371
30,056
56,218
123,348
-
Profits
Deprei
Before Estimated Net
Taxes (4) Taxes (5
$ (28,642)
(5d,968)
(64,222)
(154,496)
(97,533)
(189,193) I
(396,429)
N/A N/A
$ (23,888)
(40,424)
(51,584)
(134,157)
(72,160)
(152,766)
(325,176)
N/A
)_ Profits(6)
$ (28,642)
(50,968)
(64,222)
(154,496)
(97,533)
(189 193)
(396 429)
N/A
$ (23,888)
(40,424)
(51,584)
(134,157)
(72,160)
(152,766)
(325,176)
N/A
Present (7)
$ 2,800
4,300
9,000
15,500
15,500
36,000
60,000
N/A
$ 2,800
4,300
9,000
15,500
15,500
36,000
60,000
N/A
elation
Treatment
System(8)
$ 23,036
32,064
37,888
127,960
96,760
183,280
401,544
$ 18,932
26,056
32,196
123,220
94,420
176,232
386,672
-
Cash
Flow(9)
$ (2,806)
(14,604)
(17,334)
(42,236)
14,727
30,087
65,115
N/A
$ (2,156)
(10,068)
(10,388)
(4,266)
37,760
59,462
121,496
N/A
Present
Debt (10)
$ 935
1,496
2,805
6,290
6,290
12,096
36,210
N/A
$ 935
1,496
2,805
6,290
6,290
12,096
36,210
N/A
:bt Retirement
Treatment
System
Debt (11) Total Debt
$ 23,036
32,064
37,888
127,960
96,760
183,280
401 , 544
-
$ 18,932
26,056
32.196
123,220
94.420
176,232
386,672
-
$ 23,971
33,560
40,693
134,250
103,050
193,376
437.754
N/A
$ 19,867
27,552
35.001
129,510
100,710
188,328
422,882
N/A
Coverage (12)
Less than 0
Less than 0
Less than 0
Less than 0
0.109
0.155
0.148
Less than 0
Less than 0
Less than 0
Less than 0
0.374
0.315
0.287
N/A
High Prc
Cash
3fit Firms
Flow(13) Coverage(12)
$ 2,567
26
11,136
17,764
74,727
359 *115
N/A
$ 3,217
4,562
18,082
55,734
97,760
1851762
415,496
N/A
0.107
0.001
0.274
0.132
0.725
0 809
1.820
N/A
0.162
0.166
0.517
0.430
0.971
0.986
0.982
N/A
Notes: (1) Profit Before Taxes and Interest is calculated in Exhibits VI-12 through VI-29 with depreciation adjusted from an economic life of ten years to a tax life of five years.
(2) Interest on present debt is at 8% per annum on the debt as shown in Exhibits VI-12 through VI-29.
(3) Based on amortization over five years, 26.38 of the debt will be paid each year if payments are made yearly and the interest rate is 1070. For the average year interest
will be 6.38% and principal retirement 20%. These data are used in the table. In actuality first year payments will have more interest and less principal retirement
and last year payments the reverse. If interest is paid annually and principal retired in equal amounts, total interest paid will be lower averaging 5% on total investment,
but cash flow requirements would be higher in initial years.
(4) Profits before tax are profits before taxes and interest less interest.
(5) Estimated taxes are based on a 22% on the first $25,000 and 48% thereafter.
(6) Net profits are profits before taxes less taxes.
(7) Present depreciation is estimated to equal 10% of net fixed assets shown by the Robert Morris survey.
(8) Treatment system depreciation is based on a fast tax write-off for pollution control equipment in accordance with Section 169 of the Internal Revenue Code. A longer write-off
period and the investment tax credit would not fit well with the amortization requirements of five years and in some cases income may not be high enough to utilize the full credit.
.'9) Total Cash Flow equals Net profits plus depreciation.
(10) Present Debt is as shown in Exhibit VI-30 through VI-45. Retirement is estimated to be 10% per year.
(11) Treatment system debt is based on financing 100%, of the pollution control treatment system requirements. This is an upper bound estimate of cash flow requirements. Typical
financing is likely to require some equity participation in financing. For small firms this is likely to require use of personal assets.
(12) Coverage is the ratio of Cash flow to debt retirement.
(13) High profit firm cash flow represents those firms with a geographic or specialization permitting higher prices and higher profits. These firms have been given a 107= price premium.
A similar analysis has been made to develop this cash flow estimate.
(1^) With use of evaporator.
(ij) Without use ot evaporator costing !?14b,GGu. Operating costs raised $2,300 to compensate.
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ENVIRONMENTAL PROTECTION AGENCY
1977 CLOSURE ANALYSIS - ALTERNATE A
Establishment Size by
Nunber 01 Employees
Direct
1-4
5-9
10-19
20-49(8)
50-99
100-249
250-499
Subtotal
Municipal
Dischargers (7)
1-4
5-9
10-19
20-49(8)
50-99
100-249
Subtotal
Total
Estimated 1967
Number of
Establishments(1)
86
38
37
40
11
4
1
217
290
129
126
131
35
19
3
733
1977 Baseline
Forecast
Number of
Establishments(2)
76
33
44
48
12
5
2
220
252
107
149
161
45
22
4
740
960
Closures Due to 1977 Effluent Guidelines
Lower
Bound(3)
16
5
0
0
0
0
_0
21
52
20
0
0
0
0
_0
72
93
Upper
Bound(4)
41
14
3
0
0
0
_0
58
133
50
13
0
0
0
0
196
Range of
Total Closures
16 - 41
5-14
0-3
0
0
0
0
-58
52 133
20 - 50
0-13
0
0
0
0
72 - 196
Range of
Percent Closures(5)
18.6%- 47.7%
13.2 - 36.8
0 - 8.1
0
0
0
0
10.1 - 26.7
Number of
Establishments
Remaining 1977(6)
Lower Upper
Bound(3) Bound(4)
17.9
15.5
95.97,
38.8
10.5
0
0
0
0
9.8 - 26.7
9.8 - 26.77,
60
28
44
48
12
5
2
199
668
35
19
41
48
12
5
2_
162
119
57
136
161
45
22
_A
544
706
Notes:
(1)
(2)
(3)
(6)
(7)
The number of 1967 establishments was obtained from Exhibit 1-15
The number of 1977 establishments was obtained from Exhibit VI-1.
Lower Bound corresponds to the number of specialized plants which are affected. (See Section V.)
rpper Bound corresponds to the number of diversified plants which are affected. (See Section V.)
*ir.nge of percent closures equals the range of closures divided by the 1967 number of firms.
Wanl-fr of establishments remaining is calculated in the following way:
1977 Number of Firms - Total Closures (Baseline -i- Impact of Effluent Guidelines) = Number Firms Remaining.
Those establishments which close are the 1-4 and 5-9 man shops of cadmium and precious metal plating (more profitable
firms remain) at the lower bound. At upper bound the 1-4 and 5-9 man shops of cadmium, precious plating metal anodizing,
and phosphatizing close except for the more profitable firms. The 10-19 man cadmium pialing firms were also closed ex-
cept for the more profitable firms. .
These estimates represent the 20 to 49 man shop without an evaporator in the cost estimation. Ir an evanorator were in-
cluded, the maiber of the 20-49 man shops remaining would be six direct dischargers and 21 municipal dischargers for a
total of 27. rhe number of closures would be 144, increasing total closures, to 23? and 398.
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ENVIRONMENTAL PROTECTION AGENCY
Nvn-.bc r
ALTERNATE
A-1977 CLOSURES IN THE METAL FINISHING INDUSTRY C1)
DIRECT DISCHARG_ERS
Cadmium
Plating
\ ".hr'ent Size by
- o1' Employees
1-4
5-S
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ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A-1977 CLOSURES IN THE METAL FINISHING INDUSTRY
MUNICIPAL DISCHARGERS
^
Cadmium
Plating
Establishment Size by
Number of Employees
1-4
5-9
10-19
20-49
50-99
100-249
250-499
Total
Lower (2)
Bound
22
8
0
0
0
0
JO
30
Upper(2)
Bound
22
8
13
0
0
0
_0
43
Precious
Metal
Lower
Bound
30
12
0
0
0
0
_0
42
Plating
Upper
Bound
30
12
0
0
0
0
_0
42
Anodizing
Lower
Bound
0
0
0
0
0
0
_0
0
Upper
Bound
72
26
0
0
0
0
_0
98
Pickling
Lower
Bound
0
0
0
0
0
0
_0
o
Upper
Bound
0
0
0
0
0
0
_0
0
Pho s pha t i z ing
Lower
Bound
0
0
0
0
0
0
_0
0
Upper
Bound
9
4
0
0
0
0
_0
13
Etching
Lower
Bound
0
0
0
0
0
0
_0
0
Upper
Bound
0
0
0
0
0
0
_0
0
Total Closures
Lower
Bound
52
20
0
0
0
0
_0
72
Upper
Bound
133
50
13
0
0
0
_0
196
Number
of Firms
Remaining
200 119
87 57
149 136
161 161
45 45
22 22
_4 4
668 544
Notes (I) The proeess/size/type of discharge segments of the metal finishing industry impacted by closure were determined by the analysis presented
in Section VI-C under the heading "closure analysis." These impacted segments are identified in Tables VI-28 through VI-33 and supporting
Exhibits VI-30 through VI-56. The calculation of the number of closures in the impacted segments was made as follows:
(a) The number of establishments in an impacted process/size segment by type of discharge was determined
from Exhibit 1-15.
(b) If high profit establishments (in specialized service or isolated geographic markets) were not impacted,
these firms; were considered to remain open. The number of firms was determined from Table VI-31. Twenty-
three percent (rounded) of each size/process segment were considered direct dischargers and the remainder
municipal dischargers.
(ct Estimated closures by size, process, and type of discharge segments due to the baseline projections caused
by established economic trends is indicated in Exhibit VI - 1. These are not included in the estimated
closures due to the 1977 effluent guidelines.
(d) The estimated closures due to the 1977 effluent guidelines shown in this exhibit equals the number in the
segment (a. above) minus the number remaining (if any) due to high profits (b above) and minus baseline
closures (c above).
',Z~ Lower and Upper hound estimates refer to the impact of the lower and upper bound cost estimates as defined in Section V and throughout the
impact analysis.
Source: Exhibits 1-15, Table VI-31, Exhibit VT-1.
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ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED NUMBER OF METAL FINISHING ESTABLISHMENTS
REMAINING AFTER CLOSURES DUE TO EFFLUENT GUIDELINES
BY PROCESS SEGMENT AND TYPE OF DISCHARGE - 1977
DIRECT DISCHARGERS
Establishment
Size by Number
of Employees
1-4
5-9
10-19
20-49
50-99
100-249
250 and Over
Total
Cadmium
Plating
2
1
5
6
2
-
—
16
Precious
Metal
Plating
2
1
7
8
2
-
1
11
Anodiz-
ing
27
10
18
20
5
2
1
83
- LOWER BOUND
Pickling
7
4
4
4
1
1
—
11
Phospha-
tizing
3
2
1
1
-
-
7
Etching
19
10
9
9
2
2
51
Total
60
28
44
48
12
5
2
199
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ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED NUMBER OF METAL FINISHING ESTABLISHMENTS
REMAINING AFTER CLOSURES DUE TO EFFLUENT GUIDELINES
BY PROCESS SEGMENT AND TYPE OF DISCHARGE - 1977
DIRECT DISCHARGERS
Establishment
Size by Number
of Employees
1-4
5-9
10-19
20-49
50-99
100-249
250 and Over
Total
Cadmium
Plating
2
1
2
6
2
-
_
13
Precious
Metal
Plating
2
1
7
8
2
-
1
21
Anodizing
5
2
18
20
5
2
_1
13
- UPPER BOUND
Pickling
7
4
4
4
1
1
21
Phosphatizing
0
1
1
1
-
-
3
Etching
19
10
9
9
2
2
51
Total
35
19
41
48
12
5
2
162
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ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED NUMBER OF METAL FINISHING ESTABLISHMENTS
REMAINING AFTER CLOSURES DUE TO EFFLUENT GUIDELINES
BY PROCESS SEGMENT AND TYPE OF DISCHARGE - 1977
Establishment
Size by Number
of Employees
1-4
5-9
10-19
20-49
50-99
100-249
250 and Over
Total
Cadmium
Plating
5
2
18
20
7
2
_
54
Precious
Metal
Plating
7
3
25
28
8
2
1
14
MUNICIPAL DISCHARGERS
Anodizing
89
34
62
65
18
5
2
275
- LOWER BOUND
Pickling
23
12
9
12
4
3
1
64
Phosphatizing
11
5
5
5
2
2
_
30
Etching
65
31
30
31
6
8
_
171
Total
200
37
149
161
45
22
4
608
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-------
ENVIRONMENTAL PROTECTION AGENCY
ESTIMATED NUMBER OF METAL FINISHING ESTABLISHMENTS
REMAINING AFTER CLOSURES DUE TO EFFLUENT GUIDELINES
BY PROCESS SEGMENT AND TYPE OF DISCHARGE - 1977
MUNICIPAL DISCHARGERS - UPPER BOUND
E s tab lip, Iimen t
Size by Number
of Employees
1-4
5-9
10-19
20-49
50-99
100-249
250 and Over
Total
Cadmium
Plating
5
2
5
20
7
2
41
Precious
Metal
Plating
7
3
25
28
8
2
1
74
Anodizing
17
8
62
65
18
5
2
177
Pickling
23
12
9
12
4
3
1
64
Phosphatizing
2
1
5
5
2
2
_
17
Etching
65
31
30
31
6
8
_
171
Total
119
57
136
161
45
22
4
544
9)
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ENVIRONMENTAL PROTECTION AGENCY
Establishment Size by
Number of Employees
Direct
Pischargers(7)
' - 4
5-9
10-19
20-49
50-99
100-249
250-499
Subtotal
Municipal
Discharger(7)
1-4
5-9
10-19
20-49
50-99
100-249
250-499
Subtotal
Total
Estimated 1967
Number of
Establishments(1)
86
38
37
40
11
4
1
217
290
129
126
131
35
19
3
733
1977 Baseline
1977 CLOSURE ANALYSIS - ALTERNATE B
Closures Due to 1977 Effluent Guidelines
Number of Lower Upper Range of Range of
Establishments (2) Bound(3) Bound(4) Total Closures Percent Closures(5)
76
33
44
48
12
5
2
220
252
107
149
161
45
22
4
740
960
16 41 16 - 41 18.67.- 47.7%
5 14 5-14 13.2 - 36.8
8 22 8-22 21.6 - 59.4
0 0 0-0 0-0
_
_ - -
_ - -
29 77 29 - 77 13.37.- 35.57.
22 o-22 o - 7.6%;
8 o - o o - n fa
° U . " '•'
_
_ _ _
_ _ _ _ _
- _ _
30 o 04 1?.
29 10_7 29^107 3.0% -
Number of
Establishments
60
28
36
48
12
5
2_
191
252
107
149
161
45
22
4
740
931.
35
19
22
48
12
5
2
143
230
99
149
161
45
22
4
710
853
Notes: (1) The number of 1967 establishments was obtained from Exhibit 1-15.
(?) The number of 1977 establishments was obtained from Exhibit VI-1.
'3) Lower Bound corresponds to the number of specialized plants which are affected. (See Section V.)
(4) LKper Bound corresponds to the number of diversified plants which are affected, (See Section V.)
(5) Range of percent closures equals the range of closures divided by the 1967 number of firms.
(6) Number of establishments remaining is calculated in the following way:
1977 Number of Firms - Total Closures (Baseline + Impact of Effluent Guidelines) = Number Firms Remaining.
(7) Those establishments which close are the direct dischargers. The 1-4, 5-9's and 10-19 man cadmium and precious
metal platers are closed at the lower bound with the exception of the more profitable firms. At the upper
bound the 1-4, 5-9, and 10-19 man cadmium, precious metal plating, anodizing, and phosphatizing firms are
closed with the exception of the more profitable firms.
(.'!/ These estimates represent the 20 to 49 man shop without an evaporator in the cost estimation. If an evaporator
were included, the number of 20 to 49 man shops closing would be 9 or 23 for the lower and upper bound, respectively.
The total closures would be 37 and 109.
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ENVIRONMENTAL PROTECTION AGENCY
[,. ' i'^lishment Size by
Number of Employees
1-4
5-9
10.19
20 49
50-99
100-249
250-499
Total
ALTERNATE
B-1977 CLOSURES IN THE METAL FINISHING INDUSTRY^1)
DIRECT DISCHARGERS
Cadmium
Plating
Lower(2)
Bound
6
2
3
0
0
0
_0
y^
Upper(2)
Bound
6
2
3
0
0
0
_0
11_
Precious
Metal Plating
Lower
Bound
10
3
5
0
0
0
_0
ii
Upper
Bound
10
3
5
0
0
0
_0
u
Anodizing
Lower
Bound
0
0
0
0
0
0
_0
JJ
Upper
Bound
22
8
13
0
0
0
_0
y=
Pickling
Lower
Bound
0
0
0
0
0
0
_0
JL
Upper
Bound
0
0
0
0
0
0
0
Jl
Phosphatizing
Lower Upper
Bound Bound
0
0
0
0
0
0
_0
Jl
3
1
1
0
0
0
J2
J^
Etching
Lower
Bound
0
0
0
0
0
0
_0
JL
Upper
Bound
0
0
0
0
0
0
_0
Jl
Total Closures
Lower
Bound
16
5
8
0
0
0
_0
2g
Upper
Bound
41
14
22
0
0
0
_0
H
Number
of Firms
Remaining
Lower
Bound
60
28
36
48
12
5
2
191
Upper
Bound
35
19
22
48
12
5
2
143
Fri.es: d) The process/size/type of discharge segments of the metal finishing industry impacted by closure were determined by the analysis presented in
Section VI-C under the heading "closure analysis." These impacted segments are identified in Tables VI-28 through VI-33 and supporting
Exhibits VI-30 through VI-56. The calculation of the number of closures in the impacted segments was made as follows:
(a) The number of establishments in an impacted process/size segment by type of discharge was determined from
Exhibit 1-15.
(b) If high profit establishments (in specialized service or isolated geographic markets) were not impacted,
these firms were considered to remain open. The number of firms were determined from Table VI-31. Twenty-
three percent (rounded) of each size/process segment were considered direct dischargers and the remainder
municipal dischargers.
(c) Estimated closures by size, process, and type of discharge segment due to the baseline projections caused
by established economic trends is indicated in Exhibit VI - 1. These are not included in the estimated
closures due to the 1977 effluent guidelines.
(d) The estimated closures due to the 1977 effluent guidelines shown in this exhibit equals the number in the
segment (a above) minus the number remaining (if any) due to high profits (b above) and minus baseline
closures (c above).
(2) Lower and Upper bound estimates refer to the impact of the lower and upper bound cost estimates as defined in Section V and throughout the
impact analysis.
Source: Exhibits 1-15, Table VI-31. Exhibit VI-1.
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ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE
B-1977 CLOSURES IN
THE METAL FINISHING INDUSTRY^1)
MUNICIPAL DISCHARGERS
Cadmium
Plating
establishment Size by
Number of Employees
1-4
5-9
10-19
20-49
50-99
100-249
250-499
Total
Lower (2)
Bound
0
0
0
0
0
0
_£
_0
Upper(2)
Bound
22
8
0
0
0
0
0
30
Precious
Metal Platina
Lower
Bound
0
0
0
0
0
0
_0
Jl
Upper
Bound
0
0
0
0
0
0
J)
JL
Anodizing
Lower
Bound
0
0
0
0
0
0
_0
Jl
Upper
Bound
0
0
0
0
0
0
_0
JL
Pickling
Lower
Bound
0
0
0
0
0
0
_0
Jl
Upper
Bound
0
0
0
0
0
0
_0
_0
Phosphatizing
Lower
Bound
0
0
0
0
0
0
_0
JL
Upper
Bound
0
0
0
0
0
0
_0
JL
Etching
Lower
Bound
0
0
0
0
0
0
_0
JL
Upper
Bound
0
0
0
0
0
0
_0
JL
Total Closures
Lower
Bound
0
0
0
0
0
0
_0
Jl
Upper
Bound
22
8
0
0
0
0
_0
JiP.
Number
of Firms
Remaining
252 230
107 99
149 149
161 161
45 45
22 22
4 4
740 710
Notes: (1) The process/size/type of discharge segments of the metal finishing industry impacted by closure were determined by the analysis presented
in Section VI-C under the heading "closure analysis." These impacted segments are identified in Tables VI-28 through VI-33 and supporting
Exhibits VI-30 through VI-56. The calculation of the number of closures in the impacted segments was made as follows:
(a) The number of establishments in an impacted process/size segment by type of discharge was determined from
Exhibit 1-15.
(b) If high profit establishments (in specialized service or isolated geographic markets) were not impacted,
these firms were considered to remain open. The number of firms was determined from Table VI-31. Twenty-
three percent (rounded) of each size/process segment were considered direct dischargers and the remainder
municipal dischargers.
(c) Estimated closures by size, process, and type of discharge segment due to the baseline projections caused
by established economic trends is indicated in Exhibit VI - 1. These are not included in the estimated
closures due to the 1977 effluent guidelines.
(d) The estimated closures due to the 1977 effluent guidelines shown in this exhibit equals the number in the
segment (a above) minus the number remaining (if any) due to high profits (b above) and minus baseline
closures (c above).
(2) Lower and Upper Bound estimates refer to the impact of the lower and upper bound cost estimates as defined in Section V and throughout the
impact analysis.
Source: Exhibits 1-15, Table VI-31, Exhibit VI-1.
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ENVIRONMENTAL PROTECTION AGENCY
1983 CLOSURE ANALYSIS
Establishment Size by
Number of Employees
1977 Number of
Establishments
Remaining(1)
Lower
Bound
Upper
Bound
Closures Due to Effluent Guidelines
1977 Closures Due to
1983 Guidelines
"Spillover Impact"(2)
Lower Upper
Bound(3) Bound(4)
Range of Closures
Number of
Establishments
Remaining(5)
Lower
Bound(3)
Upper
Bound(4)
Direct
Discharger(6)
1-4
5-9
10-19
20-49(7)
50-99
100-249
250-499
Subtotal
Municipal
Discharger(6)
1-4
5-9
10-19
20-49(7)
50-99
100-249
250-499
Subtotal
Total
60
28
44
48
12
5
2
199
200
87
149
161
45
22
4
668
867
35
19
41
48
12
5
2
162
119
57
136
161
45
22
4
544
706
32
15
24
25
5
2
0
103
19
11
22
25
5
2
_0
84
19 - 32
11 - 15
22 - 24
25
5
2
0
84 - 103
101
_0
84
28
13
20
23
7
3
_2
96
200
87
149
161
45
22
4
668
16
8
19
23
7
3
_2
78
119
57
136
161
45
22
4
544
Notes: (1) Values from Exhibit VI-57
(2) The firms which are theoretically closing in 1983 will take action prior to 1983. Those that can join a
municipal system will do so to reduce costs. Others will close in 1977. Approximately 507= of the direct
discharges will close due to a "spillover" effect in 1977. (See Page 2 of Exhibit VI-59.)
(3) Lower Bound corresponds to the number of specialized plants which are affected.
(See Section V.)
(4) Upper Bound corresponds to the number of diversified plants which are affected.
(See Section V.)
(5) Number of establishments remaining is calculated as follows:
1977 Number of Firms Remaining - 1983 Spillover Closures = Number of Firms Remaining.
(6) Only direct discharges are affected by 1983 effluent guidelines. (See Page 2 of Exhibit VI-59.)
(7) The value shown are those estimated for the 20-49 man shop without an evaporator. The closure
will not change for this group for the 1983 spillover calculation: 1977 adjustments were
previously noted.
Source: Exhibit VI-57 and Kearney estimates.
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-------
ENVIRONMENTAL PROTECTION AGENCY
ALTERNATE A-1983 "SPILLOVER EFFECT" EFFLUENT
GUIDELINE CLOSURES IN THE METAL FINISHING INDUSTRY IN 1977UJ
Establishment Size by
Number of Employees
1-4
5-9
10-19
20-49
50-99
100-249
250-494
Total
Note: (1) Analysis of closures in 1983 indicate that theoretically all establishments in the direct discharging segment of the industry would close in
response to the 1983 effluent guidelines except establishments in the high profit group (with specialized services or geographically isolated
markets). Kearney's analysis indicates these firms will reflect this fact in their 1977 decisions to take steps to be able to remain profitable
after 1983 or to close. On a judgemental basis, Kearney estimates 50% of the establishments will be able to take steps to remain open such as
moving to a municipal system for discharge. The remaining 507. are estimated to close in 1977 a "spillover" effect 1983 guidelines on the 1977
investment and closure decisions. The 1983 "spillover" closures are shown in this exhibit and are calculated as follows:
a) Alternate A-1977 is used as the base for the 1983 "spillover" closure calculation. The firms remaining are shown in
Exhibit VI-57.
b) High profit firms in the 50 and above employee segments are excluded from closure. Arbitrarily (due to the difficulty
in applying the 16% to these size groups due to the low number of establishments) the segments with one establishment
were considered and two establishments were considered to have one remaining due to high profit and/or action taken to
meet the 1983 guidelines profitability.
c) After subtracting the establishments under (b) above, 507. of the firms are shown in Exhibit VI-57 were estimated to close.
DIRECT DISCHARGERS
Cadmium
Plating
Lower
Round
1
1
3
3
1
-
_
_2
Upper
Bound
1
1
1
3
1
-
_;
=£
Precious
Metal
Lower
Bound
1
1
4
4
1
-
_0
ii
Plating
Upper
Bound
1
1
4
4
1
-
_0
U
Anodizing
Lower
Bound
14
5
9
10
2
1
_0
4L
Upper
Bound
3
1
9
10
2
1
_0
2&
Pickling
Lower
Bound
4
2
2
2
0
0
_^
10
Upper
Bound
4
2
2
2
0
0
^
10
Phosphatizing
Lower
Bound
2
1
1
1
-
-
^
=£
Upper
Bound
-
1
1
1
-
-
^
J
Etching
Lower
Bound
10
5
5
5
1
1
^
XL
Upper
Bound
10
5
5
5
1
1
_i
li
Total Closures
Lower
Bound
32
15
24
25
5
2
_0
4S1
Upper
Bound
19
11
22
25
5
2
_0
84
Number
of Firms
Remaining
Lower
Bound
28
13
20
23
7
3
_2_
M
Upper
Bound
16
8
19
23
7
3
2
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ENVIRONMENTAL PROTECTION AGENCY
Establishment
Size by Number
of Employees
1-4
5-9
10-19
20-49
50-99
100-249
250 and Over
Total
ESTIMATED NUMBER OF METAL FINISHING ESTABLISHMENTS
REMAINING AFTER CLOSURES DUE TO EFFLUENT GUIDELINES
BY PROCESS SEGMENT AND TYPE OF DISCHARGE - 1983
Cadmium
Plating
1
0
2
3
1
-
^
DIRECT
Precious
Metal
Plating
1
0
3
4
1
-
lg
DISCHARGERS
Anodizing
13
5
9
10
3
1
41
- LOWER BOUND
Pickling Phosphatizing Etching Total
3 1 9 28
2 1 5 13
2 0 4 20
2 0 4 23
1 - 1
1 - 1
11 =2= |A I
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EXHIBIT 5<
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-------
ENVIRONMENTAL PROTECTION AGENCY
Establishment
Size by Number
of Employees
1-4
5-9
10-19
20-49
50-99
100-249
?.50 and Over
Total
ESTIMATED NUMBER OF METAL FINISHING ESTABLISHMENTS
REMAINING AFTER CLOSURES DUE TO EFFLUENT GUIDELINES
BY PROCESS SEGMENT AND TYPE OF DISCHARGE - 1983
Cadmium
Plating
1
0
1
3
1
Precious
Metal
Plating
1
0
3
4
1
_
DIRECT DISCHARGERS
Anodizing
2
1
9
10
3
1
- UPPER BOUND
Pickling
3
2
2
2
1
1
Phosphatizing
-
0
0
0
-
_
11
Etching
9
5
4
4
1
1
24
Total
T6
8
19
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ENVIRONMENTAL. PROTECTION AGENCY
Projected Dollar Volume After Economic
Impact Adjustments - Alternative A - 1977
(Millions of Dollars)
Calculation of 1977 Total Dollar
Lower Bound ^ '
Process Segment
Cadmium Plating
Precious Metal Plating
Anodizing
Pickling
Phosphatizing
Etching
Total
Revised
Baseline
Volume
$ 47.8
73.1
174.0
79.5
21.3
113.6
$509.3
Projected
Price
Increase
$ 6.6
10.2
21.8
9.9
2.7
14.2
$65.4
Revised
Actual
Dollar
Volume
$ 54.4
83.3
195.8
89.4
24.0
127.8
$574.7
Volume
Upper Bound ^ '
Revised
Baseline
Forecast
$ 47.6
73.1
173.7
79.5
21.2
113.6
$508.7
Projected
Price
Increase
$ 7.7
10.2
23.5
9.9
2.9
14.2
$68.4
Revised
Actual
Dollar
Volume
$ 55.3
83.3
197.2
89.4
24.1
127.8
$577.1
Notes: (1) The lower bound estimate assumes that all establishments that are good
candidates for secondary operations, do not have them. The rational used
to categorize establishments into lower and upper bounds is fully documented
in Section IV.
(2) The upper bound estimate assumes that all establishments which are good
candidates for secondary operations, do have them. The rational used to
categorize establishments into lower and'upper bounds is fully documented in
Section IV.
Sources: Table VI-14 and Exhibit VI-7.
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EXHIBIT VI-61
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ENTAL PROTECTION AGENCY
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-------
ENVIRONMENTAL PROTECTION AGENCY
Projected Dollar Volume After Economic
Impact Adjustments - 1983
(Millions of Dollars)
Calculation of 1983 Total Dollar Volume
Lower Bound (1)
Process Segment
Cadmium Plating
?recious Metal Plating
Anodizing
Pickling
PIio sphat iz ing
Etching
Total
Revised
Baseline
Volume
$ 63.8
95.0
229.6
98.0
32.6
150.4
$669.4
Projected
Price
Increase
$ 8.9
13.2
28.7
12.3
4.1
18.8
$ 86.0
Revised
Actual
Dollar
Volume
$ 72.7
108.2
258.3
110.3
36.7
169.2
$755.4
Upper Bound (2)
Revised
Baseline
Volume
$ 63.5
95.0
229.1
98.0
32.5
150.4
$668.5
Projected
Price
Increase
$ 10.2
13.2
30.9
12.3
4.4
18.8
$ 89.8
Revised
Actual
Dollar
Volume
$ 73.7
108.2
260.0
110.3
36.9
169.2
$758.3
.Totes: (1)
The lower bound estimate assumes that all establishments that are good
candidates for secondary operations, do not have them. The rational used to
categorize establishments into lower and upper bounds is fully documented in
Section V.
(2) The upper bound estimate assumes that all establishments which are good
candidates for secondary operations, do have them. The rational used to
categorize establishments into lower and upper bounds is fully documented
in Section V.
X
pa
M
Cd
M
H
Sources: Table VI-17 and Exhibit VI-9.
H
1
-------
EXHIBIT VI-63
~~""
Page
ENVIRONMENTAL PROTECTION AGENCY
ECONOMIC ANALYSIS Or EFFLUENT GUIDELINES
1977 AND 1983 - METAL FINISHING INDUSTRY SUMMARY
in iyoj.
The percentages represent the rangi_- of cos L ascociated with the process segment and s ize category for d irect and municipal dischargers The c a leu la 11 on is
based on the percent Capital Cost as shown on Tables V-15 and V-19 is of long-term debt plus equity a^ shown in Exhibits VI-30 through VI-45.
The range of 1977 Total Annual Costs is ca leu la ted by mult ipl> ing the number of establ ishments in each size group in tht~ 19 7 7 base line forecast times the low and
high BPT Alternate A Annual Costs in Table U-14.
The range of 1983 Total Annual Costs is calculated by mult i pi vi^g the number cf establ j_shments in each size group in the 1983 bjse line forecas t t intes the low and
high BAT Annual Costs in Table V-18. Thi.se are calculated for direct dischargers only. Municipal dischargers will not have additional capital costs as the
1977 pretreatment standard for municipal dischargers wil] nnt be changed in 19S3.
Incremental incieases excluding capital charges for 1977 arL calculated by multiplying the 1977 capital costs b\ 15 and subtracting from the annual costs including
capital The .15 factor reflect^ a capital chsree of 15"'. consisting of 57, for cost of capital (10" cost of capital on the average inve stment--onc -hal f of the total;
over a 10- ye a r period anc' deprec latior of 10\ pei ye ar over a 10-^ear period.
Incremental increases exclaci.it. C3pit,.l charges for 1983 c re calculated oy multiplying the 1953 capital cost^ b^ .15 and subtracting fron the annual costs including
capital. The .15 factor re f li-cts a 15° capita 1 charge cons is ting of 5J for c >s t of capita 1 (10" cost of cap j-tal on oat- half of the a /c-rage investment) over a
10-year period and depreca at. on of 10',, (>er year over a 10-.ear period. These are calculated for direct dischargers only. Municipal dischargers will not have
additional capital costs as Lhe 1977 ore treatment standard for municroai dischsie;ers will not be changed in 1983. D^scr^-penc ief- in totals on Pages 1, 1 jnd 3 are- due to
As derived from Table VI-11.
These are caIculated for direct d ischargers
dischargers will not be changed in 19S3 Tl
For direct dischargers only.
As derived fr.oir Table VI-14.
The 1977 pretreatment standard for mun^c ipal dischargers will not be changed in 1983. There- fore- the ^arke* price mere ases req : ired b establ IF hments ir order to
recoup the annual costs for meet in0 the 1S'& i urupost-d t f f 1 UP lit gi i de 1 inos apply to d irtct dischaipert < >nly . Approvinit.ee ly "'I"! of ihe metal f inicbing plants ,"re
mun ic ipa 1 discharge rs and 23% aj o direc" ui t,~ ha; ge rs ' a = d i s ~ i--, -1 c in Sect ion II) B\* 19£3 municipal aisch^Tgc- rs will repre s- n. ?fj/ or n<~.rf , T , <,< -> i -\ t •>">.' capac i f
due to the f o II Jwing factors As ~> lart - n_-.-_ • n'_ ~> e = _ - ^ , , -•- t-i r nL j%e cotitr ibut i or. to total industr * capac it • increases, ''ar.\~ 1 jr^er i •1 -j •" Lr-- • i ut'^fi-"?
nunicipal dischdrgcrs before 1 -asis, the ri'Uni^ipal a ischrrce rs will collectively hav-3 enough capacjty to set the" market
price based on their ccst If /els. No nu-irket pr ice ^nc re ases jv - those requi red to 't^ett the 19^7 staad^i ds will be nece ss ar-.' iur 'Tunic ioal di scbar^ers to recoup the
annual costs for meeting pretre atmeni. standards in 19si3 since it is unchanged from the 1977 level Therefore, the 19P3 market or ice will be that arrived at for the
1977 standards as presenceJ in Table VI li.
As derived from Exhibit VI-57.
As derived from Exhibit VI-59.
The percent redact ion of size segment capacity due to closure is calculated against the estimated 1967 numfae r of establishments
The range of the employment impact of closures is estimated b\ multiplying the average employment per estab1 is1 ment in each size groan rs shown in Table V-13 tines the
ts time ted lower and upper bound c losures Note base I in<^ c losures are exc luded from this calculation. Clos are s are based on assuning *- Ice mate A conditions, Mote that in t
closures range the high number .s associated with the lower bound e s tim&te and the low number with the upper Dound est]mate due to the .ncrementa1 nature of the calculation
based on 1977 closures.
Employees affected as a percent of employment shown in Exhibit 1-9 ut ilizing a 2 3 °!J< 77% distribution for direct and munic ipal dischargers.
Measured against community and industry growth as a whole, the impacts are very minor.
Negligible impact on the balance of trade as a whole is indicated.
Sources• (As indicated in footnotes)
-------
ENVIRONMENTAL PROTECTION AGENCY
Segment:
Range of Employees
Average Sales Volume
SIC Code
Total Plants in the Metal Finishing Industry
Number of Plants in Municipal Discharger Segment-1967
Percent of Total Plants in Municipal Discharger Segment
Number of Plants in 1977 Baseline
1983 Baseline
Number of Plants with BPT Treatment in Place^ '
Cost of Pollution Abatement
Total Capital Cost ($000,000)
"1977 - Alternate A"(2)
1983(3)
Average Annual Investment ($000,000) (4)
"1977 - Alternate A"
1983
Average Annual Investment with Pollution Control(5)
"1977- Alternate A" ($000,000)
1983
Total Capital Expenditures as
Percent of Capital(6)
Annualized Costs for Segment
—Incremental Increases including Capital Charges ($000,000)
"1977 - Alternate A"(7)
1983(8)
Incremental Increases excluding Capital Charges ($000,000)
"1977 - Alternate A"(9)
1983(10)
Incremental Increases including Capital Charges
as a Percent of Sales
"1977 - Alternate A"(ll)
1983(13)
Expected Price Increases Due to Pollution Control (Percent)
"1977 - Alternate A"(14)
1983(15)
Plant Closures
Total Closures Anticipated
"1977 - Alternate A"(16)
1983(17) "Spillover" Effect
Percent Reduction of Size Segment Capacity Due to Closured
"1977 - Alternate A"
1983 "Spillover" Effect
Employment ,. „,
Total Number of Employees Affected^1"/
"1977 - Alternate A"
1983 "Spillover" Effect
Percent of Total Employees in Size Segment(2u)
"1977 - Alternate A"
1983 "Spillover" Effect
Community Effects Impact on Industry Growth(21)
"1977 - Alternate A"
1983 "Spillover" Effect
Balance of Trade El facts(22)
ECONOMIC ANALYSIS OF EFFLUENT GUIDELINES
1977 AND 1983 - METAL FINISHING INDUSTRY SUMMARY
EXHIBIT VI-63
Page 3 oi 4
MUNICIPAL DISCHARGER
$
$
$
$
$
s
A
1-4
53,730
3471
3479
376
290
39.67.
252
191
N/A
8.4-15 5
-0-
.09
.07
.93-1.64
-0-
12 27.- 18 77.
2.6-4.2
-0-
1.3-1.9
-0-
19.1*;- 31. 37,
-0-
12.57.-16.17.
-0-
51-133
-0-
17.97.-45.97.
-0-
104-266
-0-
2 17.- 5 27.
-0-
Minor
None
None
B
5-9
$ 146,290
3471
3479
167
129
17.67.
107
89
N/A
$ 5.3- 8.8
-0-
$ .42
.34
$ .95-1.30
-0-
1137.-1877,
$ 2.5-4.0
-0-
$ 1.7-2.7
* -0-
15.8-25.47.
-0-
12.57.-16.il
-0-
20-50
-0-
15.57.-38.87.
-0-
140-350
-0-
167.-417.
-0-
Minor
None
None
Industry
C
10-19
$ 284,670
3471
3479
163
126
17.27.
149
177
N/A
$ 9.7-15.2
-0-
$ 1.89
2.26
$ 2.86-3.41
-0-
797.-1317.
$ 5.8-8.3
-0-
$ 4.3-6.0
-0-
13.77.-19.67.
-0-
12.57.-16.17.
-0-
0-13
-0-
0-10.37.
-0-
0-182
-0-
0-107.
-0-
Minor
None
None
Size Segment Codes
D
20-49
$ 600,000
3471
3479
171
131
18.07.
161
191
N/A
$49.1-55.4
-0-
$ 3.50
4.13
$ 8.41-9.04
-0-
1497.-1687.
$ 15.2-18.9
-0-
$ 7.8-10.6
-0-
15.77.-19.67.
-0-
12.57.-16.17.
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
Minor
None
None
E
50-99
$ 1,263,000
3471
3479
46
35
4.87.
45
52
N/A
$19.6-22.2
-0-
$ 2.62
3.10
$ 4.58-4.84
-0-
1117.-1257.
$ 6.7-8.9
-0-
$ 3.8-5.6
-0-
11.97.-15.67.
-0-
12.57.-16.17.
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
Minor
None
None
p
100-249
$ 2,940,000
3471
3479
23
19
2.47,
22
25
N/A
$20.0-22.5
-0-
$ 3.79
4.63
$ 5.79-6.04
-0-
7 87.- 847.
$ 6.9-9.1
-0-
$ 14.9-19.8
-0-
10.67.-14.07.
-0-
12.57.-16.17.
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
Minor
None
None
250 and Over
$ 6,566,000
3471
3479
4
3
.47,
4
6
N/A
$ 9.1-10.2
-0-
$ 1.31
1.94
$ 2.22-2.33
-0-
N/A
$ 3.1-4.1
-0-
$ 14.9-16.0
-0-
11.97.-15.67.
-0-
12.57.-16.17.
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
N6nt
None
None
Total
$53,730-S6,566,000
3471
3479
950
733
1007.
740
731
N/A
$121.2-149.8
-0-
$ 13.62
16.47
$25.74-28.60
-0-
11 87.- 13 97.
$ 42.8-57.5
-0-
$ 35.4-43.5
-0-
-
12. 57.- 16.1%
-0-
72-196
-0-
9. 87.- 2 6. 77.
-0-
244-798
-0-
27.- 67.
-0-
Minor
None
None
(Please see Page 4 for footnotes.)
-------
ENVIRONMENTAL PROTECTION AGENCY
Segment:
Range of Employees
Average Sales Volume
SIC Code
Total Plants in the Metal Finishing Industry
Number of Plants in Direct Discharger Segment-1967
Percent of Total Plants in Direct Discharger Segment
Number of Plants in 1977 Baseline
1983 Baseline
Number of Plants with BPT Treatment in Place(1)
Cost of Pollution Abatement
Total Capital Cost ($000,000)
1977 - Alternate A (2)
1983 (3)
Average Annual Investment ($000,000)(4)
1977 - Alternate A
1983
Average Annual Investment with Pollution Control(5)
1977 - Alternate A $(000,000)
1983
Total Capital Expenditures as
Percent j;f Capital in Place (6)
Annualized Costs for Segment
Incremental Increases including Capital Charges ($000,000)
1977 - Alternate A
1983 (8)
Incremental Increases excluding Capital Charges ($000,000)
1977 - Alternate A (10)
1983 (10)
Incremental Increases including Capital Charges
as a Percent of Sales
1977 - Alternate A (11)
1983 (12)
Expected Price Increases Due to Pollution Control (Percent)
1977 - Alternate A (14)
1983 (15)
Plant Closures
Total Closures Anticipated
1977 - Alternate A (16)
1983 - "Spillover Effect" (17)
Percent Reduction of Size Segment Capacity Due to Closure (18)
1977 - Alternate A
1983 - "Spillover Effect"
Employment
Total Number of Employees Affected (19)
1977 - Alternate A
1983 - "Spillover Effect"
Percent of Total Employees in Size Segment (20)
1977 - Alternate A
1983 - "Spillover Effect"
Community Effects Impact on Industry Growth (21)
1977 - Alternate A
1983 - "Spillover Effect"
Balance of Trade Effects (22)
ECONOMIC ANALYSIS OF EFFLUENT GUIDELINES
1977 AND 1983 - METAL FINISHING INDUSTRY SUMMARY
A
1-4
$53,730
3471
3479
376
86
39.6%
76
56
N/A
$2.5-4.7
1.6-3.0
$.03
.02
$.28-. 50
.18-. 32
2277.- 34 77.
$.8-1.2
.5- .8
$.4-. 5
.3-. 3
19.1%- 3 1.37.
16. 47.- 2 7. 07.
12. 57.- 16. 17.
0
16-41
19-32
18.67.-47.77.
53. 37.- 54. 37.
32-82
38-64
2 17.- 547.
2S7.-427.
Minor
Minor
DIRECT D:
B
5-9
$146,290
3471
3479
167
38
17 . 67.
33
27
N/A
SI. 6-2. 7
1.1-1.9
$.12
.10
$.28-. 39
.21-. 29
2 107.- 34 77.
$.8-1.2
.5- .9
$.6-. 8
.2-. 5
15. 87.- 2 5. 47.
13. 37.- 2 1.87.
12. 57.- 16. 17.
0
5-14
11-15
13. 27.- 36. 87.
53.67.-57.97.
35- 98
77-105
147,- 3 87.
307.-417.
Minor
Minor
ISCHARGERS
Industry Size Segment Codes
C
10-19
$284,670
3471
3479
163
37
17.27.
44
53
N/A
$2.9-4.5
3.0-4.6
$.57
.67
$.86-1.02
.97-1.13
14 87.- 2447.
$1.7-2.5
1.9-2.5
$1.3-1.7
1.1-1.4
13. 77.- 19. 67.
11. 97.- 16. 97.
12. 57.- 16. 17.
0
0-3
22-24
07o- 8 . 17o
5 3. 77.- 54. 67.
0- 42
308-336
07.-407.
277.- 307.
Minor
Minor
D
20-49
$600,000
3471
3479
171
40
18.07.
48
58
N/A
$14.6-16.5
15.2-17.2
$1.00
1.23
$2.46-2.65
2.75-2.95
2777.-3127.
$4.5-5.7
4.7-5.9
$2,3-3,2
1.7-2.4
15 . 77.- 19 . 67.
13 . 57.- 16 . 87.
12. 57.- 16. 17.
0
0
25
0
52 . 17.
0
750
0
627.
Minor
Minor
E
50-99
$1,263,000
3471
3479
46
11
4 . 87.
12
15
N/A
$5.2-5.9
5.6-6.4
$.78
.98
$1.30-1.37
1.49-1.57
2067.-2337,
$1.8-2.4
1.9-2.5
$1.0-1.5
.8-1.1
11. 97.- 15. 67.
10. 27.- 13. 47.
12. 57.- 16. IX
0
0
5
0
41.77.
0
335
0
487.
Minor
Minor
F
100-249
$2,940,000
3471
3479
23
4
2.47.
5
8
N/A
$4.6-5.1
6.3-7.0
$1.13
1.38
$1.59-1.64
2.01-2.08
1457.
$15.6-20.6
2.1- 4.5
$3.9-5.7
1.0-2.7
10. 67.- 14. 07.
9. 17.- 12. 17.
12 . 57.- 16 . 17.
0
0
2
0
40.07.
0
280
0
387.
Minor
Minor
G
250 and Over
$6,566,000
3471
3479
4
1
.47.
2
3
N/A
$4.6-5.1
5.9-6.6
$.39
.58
$ .85- .90
1.17-1.24
N/A
$15.6-16.8
2.0- 2.7
$1.7-2.6
.8-1.9
11. 97.- 15. 67.
5. 67.- 13. 57. .
12 . 57.- 16 . 17.
0
0
0
0
0
0
0
0
0
None
None
EXHIBIT Vl-63
Page 2 of A
Total
$53,730-$6,566,000
3471
3479
950
217
1007.
220
220
N/A
$36.0-44.5
38.7-46.7
$4.02
4.91
$7.62-8.47
8.78-9.53
2277.-2S67.
$40.8-50.4
13.6-19.8
$24.5-35.1
5.9- 9.7
-
-
21-58
84-103
10. 17.- 26. 77.
51.57.-51.87.
67-222
1788-1870
27.- 107.
4 67.- 4 87.
Minor
Minor
Minor
Minor
(Please see Page A for footnotes.)
-------
I'NVTKONMEKTAL 1'ROTbC J_aONaGENC/
SIC Code
lumber oi Plant t lr. Size Segn-.ents 196"
I'-Tcen! -if lr.L al Industry Plants
Kunmer Oi. riantfe in 19/7 Baseline
198J Bnsel:iie
•lumber of Plants Direct Dischdn;iny
Percent t'f To^ai Industrv Plants
Ptrcent ot Plants in Size Segments
Nunbei- of Plants with BPT Treatment in Place
C o &t_ of P ^llut i on _Ab a^t eni gn t
:l"o"i.El ']"aprt-rr Co^st ($000,000)
"1C77 - Alt-mate A" (2)
1983,:)
A"?rage Annual In^estirent ($000,000) (M
"1977 - Alternate A"
1983
Averajse Annaal Investment with Pollution Control' '
'•]977 „ Alternate A" ($000,000)
19S3
lc',2.1 Capital Expenditures as
Perceuc of Capital(C)
Annual^' ze-' Costs for Segment
Incremental increases inrludir.j: Capital Charges ($000,000)
"1977 - Alternate A"'7)
1983(8)
Jnrre.nfrtai Iiicreases excluding Capital Charges ($000,000)
"l°/7 - Alternate A"(10)
1983(10)
ITK .'ei"er.lal Increases including Capital Charges
as EFFLUfA"! GUIDELINE
FINISHING IWJUSTEV 3D
MKARY
EXHIBIT ''1-63
Pagt j of 4
ni';EC'! AND ^JNICIP^L DISChARCFRS
^,
$
$
$
$
*
A
1-4
53,730
3471
3479
376
39.67.
328
247
156
9.17.
237
N/A
10.9-20.2
1.6-3.0
.12
.09
1.21-2.14
.18-. 32
1227.-347?.
3.4-5.4
.5-. 8
1.8-2.4
.3- 3
19.17.-31.37,
16.4"-27.07.
12 57.-lo.17.
-0-
68-x74
19-32
18. 67.- 4 7. 77.
12.37.-12.37.
136-348
38-64
20. 6V 52. 87.
5. 87.- 9 77.
Minor
Minor
B
5-9
$ 146,290
3471
3479
167
37.67
140
116
38
4.07
237;
N/A
? 6.9-11.5
1.1-1.9
$ .54
.44
$ 1.23-1.69
.21-. 29
1137.-3477,
$ 3.3-5.?
.5-. 9
? 2.3-3.5
.2-. 5
15. 87.- 25. 47.
13. 67.- 21. 8%
12.5r.-16.1%
-0-
25-64
11-15
13.27-36.87.
13.07.-14.57.
175-448
77-105
15. 67.- 40. 07.
6. 97.- 9. 47.
Minor
Minor
Industr
C
10-19
$ 284,670
3471
3479
163
17.27
193
230
37
3 . 97.
237.
N/A
$ 12.6-19.7
3.0-4.6
$ 2.46
2.93
$ 3.72-4.43
.97-1.13
79%- 2445,
$ 7.5-10.8
l.S-2.5
S 5.6-7.8
1.1-1.4
13. 77.- 19. 67.
11. 97-16.97.
12,:>7,-16.17.
-0-
0-16
22-24
0-8.17,
12.47.-12.47.
0-124
308-336
0-5.47.
13.47.-14.67.
Minor
Minor
v Size Segment
D
20-49
<, 600,000
3471
3479
171
18.07.
209
249
40
4.27.
237.
N/A
$ 63.7-71.9
15.2-17.2
S 4.50
5.36
$10.87-11.69
2.75-2.95
1497.-3127.
$ 19.7-24.6
4.7-5.9
5 10.1-13.8
1.7-2 4
15.77.-19.67.
13.57.-16.8i
i2.57.-16.l-,
-0-
-0-
25
-0-
11.97.
-0-
750
-0-
14.1%
Minor
Minor
Codes
E
50-99
$ 1,253,000
3471
3479
46
4.87.
57
67
11
1 . 27.
237.
N/A
$ 24.8-28.1
5.6-6.4
$ 3.40
4.03
$ 5.88-6.21
1.49-1.57
111%- 2337.
$ 8.5-11.3
1.9-2.5
S 4.8-7.2
.8-1.1
lo!2r!-13!«
12.5%-16.1X
-0-
-0-
5
-0-
8.87,
-0-
335
-0-
11.07,
Minor
Minor
F
100-249
$ 2,940,000
3471
3479
23
2.47.
27
33
4
.47,
237,
N/A
$ 24.6-27.6
6.3-7.0
$ 4.92
6.01
$ 7.38-7.68
2.01-2.08
787.-1457.
$ 22.5-29.7
2.1-4.5
$ 18.8-25.6
1.0-2.7
10.6%-14.07.
9.17-12.17.
12.57.-16.17.
-0-
-0-
2
-0-
7.47.
-0-
280
-0-
8.77.
Minor
Minor
G
250 and Over
$ 6,566,000
3471
3479
4
. 47
6
9
1
.1"
237,
N/A
S 13.7-15.3
5.9-6.6
$ 1.70
2.52
$ 3.07-3.23
1.17-1.24
N/A
$ 18.7-20.9
2.0-2.7
$ 16.6-18.6
.8-1.9
ll.97.-lb.67.
5.67.-13.57.
12.57.-16.17.
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
Minor
Minor
Total
$53,730-56,566,000
3471
3479
950
1007,
960
951
218
237.
237.
N/A
$ 157.2-194.3
38.7-46.7
$ 17.64
21.38
$ 33.36-37.07
8.78-9.58
11871-2567.
$ 83.6-107.9
13.6-19.8
$ 60.0-78.9
5.9-9.7
-
12.5r.-16.ir,
-0-
93-254
84-103
9.9%- 26. 7%
11.91-11.97.
311-1,020
1,788-1,870
-0-
-0-
Minor
Minor
Balance of Trade Effects
^22^
(Please see ^age A for footnotes.)
-------
VII - LIMITS OF THE ANALYSIS
In this section the accuracy of the analysis and the major
assumptions inherent in the conclusions are discussed.
ACCURACY
Accuracy of the economic impact analysis is directly depen-
dent on the accuracy of information gathered pertaining to the
metal finishing industry. Specific sources of information which
influence accuracy are the following:
1. Published United States Government data.
2. Published industry data.
3. Unpublished information supplied by knowledgeable
industry personnel.
4. Cost data provided by EPA developed separately
under contract by Battelle Columbus Laboratories.
5. Estimates by Kearney personnel.
(a) United States
Government
Published Data
The published data provided by the Census of Manufactures -
1967 and 1973 and the Annual Survey of Manufactures - 1971 and
1972 has been relied upon heavily to construct the description
of metal finishing industry size and structure. Insofar as this
data is inaccurate, Kearney's assessment of economic impact will
correspondingly require modification, Kearney assumed that the
split between direct and municipal dischargers obtained from the
Bureau of the Census applied equally to all process segments.
-------
VII - 2
(b) Published
Industry Data
1. Plant Size and Metal Finishing Process Segment
Distribution. The Metal Working Guide - 1973 published by Iron
Age Magazine was used to establish the size distribution of
number of plants by metal finishing process segment and number
of employees. This document does not cover plants which employ
less than twenty personnel. Kearney assumed that the distribu-
tion of establishments by process segment for the plants with
under twenty personnel approximated that of establishments with
twenty personnel and over. Insofar as this distribution of the
smaller establishments is different, the economic impact will
be correspondingly different.
2. Financial Data. Little financial data is available
for firms in the metal finishing industry except for the Annual
Statement Studies published by Robert Morris Associates, the
Business and Economic Evaluation of the Metal Finishing Industry
published by the Bureau of Business Research, Graduate School of
Business Administration, the University of Michigan and informa-
tion furnished by the National Association of Metal Finishers.
No reliable sources which specifically segregated financial data
by process segment and firm size were uncovered during the course
of this survey. Therefore, all financial data presented is an
estimate of industry averages based on information obtained from
the sources presented above.
-------
VII - 3
(c) Unpublished Information
Supplied by Industry
_ Personnel __
Kearney conducted a survey in which over 100 establishments
in SIC 3471 and 3479 were either personally contacted or inter-
viewed by telephone. The purpose of this survey was tc determine
plant capacities, type of water pollution control facilities in
existence, operating and cost data, and plans for future growth
and development.
In addition, Kearney was given some data on a confidential
basis regarding sales and profit margins by some metal finishing
firms .
Kearney also personally interviewed 13 banks in large cities
to determine criteria for making loans to metal finishing firms
and the availability of funds for pollution centre 1
These data have been treated on a confidential basis and
are assumed to be accurate. However, not all respondents would,
or could, supply the desired information. Thus, some data bad
to be estimated to provide a complete analysis,
(d) Cost Data
Battelle Columbus Laboratories was retained :.*. ."VA Lc pro-
vide technical and cost data for the proposed effiuur.i. ;. uid= lir.e
Kearney was provided the Battelle Columbus Laboratories dnta hy
EPA as the data base on which to assess economic irrpact . ih~-
cost data was reviewed where possible. This c-, -'i;;,r %vi^ limited,
-------
VII - 4
but the order of magnitude of costs associated with the pollution
technologies recommended seemed to be in line with industry
expectations. Insofar as the cost data furnished by EPA through
its technical contractor Battelle Columbus Laboratories is
changed, modified or inaccurate, the economic impact assessment
will correspondingly require modification.
(e) Municipal User
Charges
The relationship of municipal discharger costs to meet
pollution control to those of direct discharger is critical to
impact assessment. Insofar as change in municipal user charges
for use of municipal systems are not consistent with the cost
relationships assumed in 1977 Alternates A and B and 1983, the
impact analysis must be modified to reflect these changes.
(f) Kearney
E_s_t_imat_es_
Some data was considered proprietary and not made available
by industry sources. Therefore, it was occasionally necessary
to make estimates. All areas where estimates are made are docu-
mented as such.
CRITICAL ASSUMPTIONS
IN THE ANALYSIS
The assessment of the economic impact of the proposed
effluent guidelines in the metal finishing industry is based
on a set of assumptions. These assumptions have a direct bearing
on the results of the study. The following major assumptions
have been made.
-------
VII - 5
(a) Cost Associated
With the Proposed
Effluent Guidelines
All economic impact analysis is based only on the costs
of meeting the proposed effluent guidelines provided by EPA
through its technical contractor Battelle Columbus Laboratories.
Treatment technology is only relevant as it relates to the costs
imposed. Some industry members have questioned whether the
proposed effluent guidelines can be achieved with the suggested
technology. If the required technology changes and costs are
revised due to technical innovations, or if costs are collectively
modified through other arrangements such as industrial treatment
districts, then the economic impact will be correspondingly altered,
(b) Ability of the Firms
in the Industry to
Meet the Proposed
Effluent Guidelines
The economic impact analysis assumes that all viable firms
in the industry which pass the closure analysis will be able to
stay in business. The analysis assumes that the firms will be
able to install pollution control equipment in time to meet the
1977 and 1983 deadlines and that financing will be available for
those who qualify. If firms cannot meet the 1977 and 1983 dead-
lines due to inadequate lead time in the face of tight supply con-
ditions in pollution control equipment and/or if tight money makes
funds unavailable for pollution control equipment, then the
economic impact will be correspondingly more severe.
-------
VII - 6
(c) Regulatory
Enforcement
It was assumed that the enforcement of the effluent guide-
line regulations for both direct dischargers by the federal
government and municipal dischargers by local authorities will
be effective and establishments will not be able to operate in
violation of guidelines.
(d) Response to
Guidelines
It was assumed that industry will respond to the effluent
guideline limitations as promulgated. If industry response is
based on a belief that guidelines will be changed or delayed by
administrative or legal action, impact will change correspondingly.
Potentially delays in responding could create much more severe
impacts.
CRITICAL PARAMETER
ESTIMATES
Based on the information available, estimates have been made
of economic parameters necessary to the impact analysis. Inso-
far as these estimates do not accurately reflect real conditions,
the impact results may require modification.
(a) Plant Size
Chara c t e r i s t i c s
It was assumed that plants within each industry size seg-
ment have similar characteristics. Sales and employment are
assumed to be relevant units of industry categorization for the
-------
VII - 7
economic impact analysis. Within each size and process segment
the "average" or "typical" plant is considered representative of
the impact of all plants in that group.
(b) Operating Characteristics
of the Industry
The assumption was made that the distinctions made by Battelle
Columbus Laboratories adequately reflected differences between
small plants and large plants with respect to waste streams and
the method of performance of metal finishing operations.
(c) Baseline Industry
Forecast
All aspects of the economic impact are analyzed using the
baseline industry forecast. Modest changes in this forecast
will not substantially affect the analysis of economic impact.
However, an acute shift in the baseline industry forecast would
have a definite effect on the economic impact analysis.
(d) Elasticity of
Demand
Kearney estimated a relatively inelastic demand for metal
finishing services at -0.1 to -0.3. If the mid-point estimate
is not representative of market conditions, the economic impact
listed in the analysis will be correspondingly affected.
(e) Cost of Capital
and Depreciation
A 1070 cost of capital and a 10-year straight-line deprecia-
tion based on a 10-year economic life for the treatment system
-------
VII - 8
was used. If these estimates must be modified, then the economic
impact must be correspondingly changed.
(f) Amortization
A loan amortizatioii period of five years was used. If
longer amortization periods can be negotiated, then the impact
analysis must be revised.
(g) Closure
Model
The parameters used in the closure model are assumed to be
accurate. Insofar as they must be changed or modified, the
analysis of economic impact must be correspondingly modified.
The assumption has been made that all viable firms in the industry
which pass the closure test will choose to stay in business. If
a large number of these firms choose to shut down (because of
such intangible factors as owner's age or health), then there
could be a shortage of metal finishing services. Prices would
rise further, and the economic impact strictly due to the efflu-
ent guidelines will be correspondingly changed.
(h) Plant Distribution
by Geographical
Location
The municipal dischargers and direct dischargers were assumed
to be distribiited equally by geographical location. Also, it was
assumed municipal and direct dischargers occurred in the same pro-
portion in urban and rural communities, that is, 7770 and 2370,
respectively.
-------
VII - 9
(j) Investment
Decision
It was assumed that all shop owners could utilize 1977 in-
vestments as part of the 1983 treatment system. If the 1983
treatment system cannot utilize 1977 investments; costs of treat-
ment, prices, and other impacts will require modification.
(k) Chemical Analysis
Requirements
Battelle Columbus Laboratories estimated the cost of analy-
sis of $12,500 per year. This cost was not included in the im-
pact analysis because the estimate seem atypical. However,
reporting and analytical requirements would have a significant
impact if the costs reach this high level.
(1) Water
Usage
Battelle Columbus Laboratories recommended process water
usage rates for the metal finishing industry. Since rinsing
affects the final appearance of plated products, it was assumed
these recommended rates would adequately maintain product qual-
ity. Any degradation of product quality will reduce the business
volume of the establishment, and the impact analysis would be
modified accordingly.
(m) Market
Prices
It was estimated that 80% of total capacity was sufficient
to establish market prices in this industry due to the ease of
expansion and new entry. Insofar as this factor is marketly
-------
VII - 10
different in the actual market, the impact analysis must be
modified accordingly.
(n) Toxic
Substances
No consideration was given to the impact of federal regula-
tion for hazardous wastes on the metal finishing industry. Some
metal finishing industry wastes are toxic and their regulation
may create additional costs and impacts on the industry.
-------
APPENDIX A
DISCUSSION OF POLLUTION CONTROL
FOR IN-PLANT OR CAPTIVE
METAL FINISHING OPERATIONS
-------
APPENDIX A
Page 1 of 1(5
APPENDIX A
DISCUSSION OF POLLUTION CONTROL
FOR IN-PLANT OR CAPTIVE
METAL FINISHING OPERATIONS
IDENTIFICATION OF IN-PLANT OR
CAPTIVE METAL FINISHING OPERATIONS
Discussion in Section II of this report distinguished be-
tween the separate metal finishing establishments covered by
SIC 3471 and 3479, and the in-plant or captive operations
which utilize metal finishing for their products. The Standard
Industrial Code classifies manufacturing establishments by
principal product or service listing which they furnish. Other
products or services which are considered to be secondary are
not covered by SIC identification. Thus, a metal finishing
establishment which lists the metal finishing service as its
principal product, is listed under SIC 3471 or 3479 regardlesf
of captive or independent ownership. Conversely, a plant which
produces a product such as automobiles, and which performs in
its operations such finishing lines as phosphate coating, spray
painting, electroplating or electrocoating, is listed under
SIC 3711 covering automobiles, and the various metal finishing
operations are not listed separately.
The purpose of this Appendix is to identify and discuss
the in-plant or captive metal finishing operations which were
not included in the study.
-------
APPENDIX A
Page 2 of 10
OPERATIONS
COVERED
In-plant operations which supplement the manufacturing
processes in typical metalworking plants include almost every
type of metal finishing service. However, the majority of the
metalworking plants have only one or two metal finishing opera-
tions as part of the manufacturing process.
The types of metal finishing services which are found in
metalworking plants are listed in Exhibit A-l. These are
essentially the processes covered by SIC 3471 and 3479, that is,
electroplating; other electrocoating; pickling and cleaning;
chemical coating; chemical milling and etching; painting,
lacquering and enameling; galvanizing and other hot dip coating;
and various mechanical finishing operations.
NATURE OF METAL FINISHING
INSTALLATIONS
In-plant metal finishing operations are found in separate
departments, or directly in production lines. Generally those
operations which are time consuming, such as electroplating,
pickling and engraving are separated from production lines in
individual departments. Operations which may involve a sequence
of steps which may be space consuming, such as porcelain
enameling, hot dip galvanizing and electropainting, are also
generally located in separate departments. Other operations
which do not require an excessive amount of space are often
located directly in production lines. Such operations include
-------
APPENDIX A
Page 3 of 10
spray or dip painting, anodizing, phosphatizing, and cleaning.
Metal finishing operations within plants are considered
to be service operations. Thus, the metal finishing operations
are not generally considered to be profit centers. True costs
in these departments are often not known since only the direct
labor and direct materials costs can actually be isolated.
In these circumstances, profitability in the usual sense is
not measured, and only direct manufacturing costs are able to
be identified.
SIZE OF IN-PLANT OR CAPTIVE
METAL FINISHING SEGMENT OF
THE METAL PROCESSING INDUSTRIES
Because of the captive nature of the in-plant metal finish-
ing operations, very little reporting of these installations has
been done. Typically the companies which have in-plant metal
finishing operations are not members of the National Association
of Metal Finishers or any of the other trade associations which
represent the industry.
The principal source of information which is readily
available regarding these in-plant operations is the 1967
Census of Manufactures report on selected metal working op-
erations. The questionnaire for this report was sent only to
establishments with more than a total of ten employees. There-
fore, the small industrial establishments provided no infor-
mation regarding in-plant metal finishing operations.
-------
Exhibits A-2, A-3, and A-4 were prepared from tl>-- data re-
ported in the 1967 Census of Manufactures regarding the analysis
of selected metalworking operations. These exhibits provide data
on the number of establishments and number of in-plant metal
finishing workers for 117 SIC groups. The following metal
finishing operations were reported in the census data, and are
covered by the exhibits.
Exhibit A-2 - Electroplating and Other Plating
Exhibit A-3 - Hot Dip Galvanizing and Other^1)
Hot Dip Coating
Exhibit A-4 - Painting, Lacquering and Enamel ing (*-'
No information is available from census data regarding
other metal finishing operations, such as polishing and buffing,
which may be located in the plants of the industry groups
studied. These other operations probably are utilized to the
same extent as the three primary groups reported. Additionally,
no information is available from census sources regarding
existence of metal finishing operations in other industry groups.
Exhibit A-5 summarizes the data for the industry and also
provides data regarding the total employment and number of
establishments. A total of 84,214 establishments with 7,779,600
employees were included in the SIC industry groups covered by
the census report. Of these, 44,611 establishments with
These processes are not included in this
study, but data is presented to provide
an overview of all in-plant metal finishing
operatioas.
-------
APPENDIX A
Page 5 of 10
7,671,400 employees had more than ten employees and were in-
cluded in the analysis of metal working operations. These
establishments were part of the following basic SIC industry
groups:
SIC No. Industry
19 Ordnance and Accessories
33 Primary Metal Industries
34 Fabricated Metal Products
35 Machinery Except Electrical
36 Electrical Equipment and Supplies
37 Transportation Equipment
38 Instruments and Related Products
From the data in Exhibits A-2, A-3, and A-4, the following
information can be summarized regarding the number of in-plant
metal finishing installations which have been reported.
-------
APPENDIX A
Page 6 of 10
Table A-l
Number of In-plant Metal
Finishing Establishments
Establishments:
1-4 Workers
5-19 Workers
Over 20 Workers
Totals
Production Workers:
1-4 Workers
5-19 Workers
Over 20 Workers
Totals
Electroplating Galvanizing^) Paint ing (D
1,107
704
356
231
101
62
7,931
1,974
875
2,389
2,085
5,529
15,692
25,474
394
268
441
1,679
4,233
10,780
12,845
14,386
58,402
91,024
Note: (1) These processes are not included in this study,
but data is presented to provide an overview of
all in-plant metal finishing operations.
Source: Exhibit A-2, A-3, A-4.
From Exhibit A-5 the total number of establishments which
were covered by the census data were:
Number of Establishments
Number of Employees
All
Establishments
84,214
7,779,600
Establishments
Over 10 Employees
44,611
7,641,400
From the table note that:
10 Electroplating is utilized in 503% of the
establishments reporting but only 00370 of the total establish-
ment employment participate in this activity.
-------
APPENDIX A
Page 7 of 10
2. Galvanizing is utilized in 0.87o of the establish-
ments, reporting and requires only . 057o of total employment.
3. Painting is the most common finishing operation
since 24017o of the establishments indicated such in-plant
facilities. Thus 1.270 of the total production employment
is engaged in painting activities.
4. Only 52o97o of the total establishments have over
10 employees and reported. However, these establishments re-
present 98027o of the industry employment.
5o Approximately 40,000 establishments were not
included in the survey because they had fewer than ten employees
per firm, only 138,000 employees were estimated to be employed
in these establishments, or an average of 3.5 employees per
establishment. The 44,611 establishments which were included
in the survey had an average of 171 employees per firm0
The establishment totals of Table A-l may not be cumulative
because some plants may have more than one type of metal finish-
ing operation installed. However, the production workers in
these three process groups can be totaled, and add up to
120,731 workers0 This is only 1»6 percent of the total employ-
ment in the industry, and averages only about nine workers per
establishment for each process. Average metal finishing
employment per plant represents only about 5 percent of total
average employment per plant for the reporting firms.
-------
AP PEN -I-IX A
Page "T of I'D
Although no data based on actual industry surveys exist
regarding the true number of establishments with in-plant
metal finishing operations, there is good reason to believe
that the total is actually far greater than the number reported
in the census survey,, Almost every establishment which
manufactures a finished product or component has some form of
metal finishing operation as part of its production facilities.
Electroplating and galvanizing installations are relatively few
in number, and the numbers reported in the census reports may
be representative of the actual totals. However, we believe
that painting installations and other types of metal finishing
operations which were not reported, may be up to 50 percent of
the plants employing over ten people. If this is true, probably
22,000 establishments have one or more metal finishing operations
installed,, At an average of nine production workers per plant,
the employment in the in-plant or captive metal finishing
operations may be on the order of 200,000 workers..
NATURE OF THE
POLLUTION PROBLEM
The water pollution problem related to in-plant metal
finishing operations is complicated by the fact that usually
other operations which produce water pollution also exist in
the plant. Cutting oils, solutions from washing and cleaning
operations, coolants from welding and forming operations, wash
water from air pollution wet scrubbers, and a variety of other
liquid wastes are also generated,, In the majority of cases
-------
APPENDIX A
Page 9 of 10
the wastes from these operatioi s combine with the wastes from
metal finishing operations to form single waste streams.
RELATIONSHIP OF COSTS IN
IN-PLANT OPERATIONS
The wide range of processes and products of the metal-
working industry make it impossible to establish a direct
relationship, based on reported information, between metal
finishing costs and total product costs„
As a means of approximating the overall relationship of
metal finishing costs to product costs, the Census of Manu-
factures data was usedc For the seven industry groups which
have been described as being included in the metal working
industry, the value added by manufacture was almost exactly
50 percent of the value of shipments. The labor content of
manufacturing is included in the value added, and in fact,
constitutes about one-third of this item.
The production labor for metal finishing operations has
been identified as being 5 percent of the total labor for the
establishments which were covered by the industry survey of
selected metalworking operations. Assuming that the relation-
ship of labor for metal finishing operations is the same as it
is for all manufacturing operations, then the value of metal
finishing can be calculated to be 5 percent of 50 percent of
value of shipments, or about 2.5 percent of value of shipments,
This will obviously vary widely depending on the nature of the
-------
APPENDIX A
Page 10 of 10
final product and the amount of metal finishing which is done.
However, for purposes of overall analysis, metal finishing costs
can be taken at an average of $2.50 per $100 value of product.
Costs of pollution control may be less for in-plant metal
finishing operations than for separate establishments doing
metal finishing,, This may be the case, since many studies
have indicated larger treatment systems have lower costs even
though they may treat diverse waste flows. Most of these in-
plant installations will be in plants with significant additional
waste generating processes. Although it can be assumed that
direct labor and direct material costs may be about the same
for both types of establishments, the overhead costs will be
greatly different,, This is because the costs of such items as
maintenance, utilities, supervision and supplies are spread
over a much larger production base in the integrated plant,,
Finally, in integrated plants compatible costs of pollution
control are proportionately lower for only the metal finishing
portion because of the inherent economies present when treating
the combined waste stream.
-------
EXHIBIT A-l
ENVIRONMENTAL PROTECTION AGENCY
TYPICAL IN-PLANT METAL
FINISHING OPERATIONS
Operation Description Typical Products
Anodizing Aluminum construction products.
Electroplating Appliances, automotive trim.
Cleaning and Descaling Steel forgings, castings, heat
treated parts.
Coloring Aluminum products.
Decorative Plating Appliances, housewares.
Precious Metal Plating Jewelry, electronic circuits.
Electropolishing Metal components.
Phosphatizing Steel automotive and construction
products.
Enameling Housewares and appliances.
Engraving Jewelry, nameplates.
Etching Electronics, nameplates.
Galvanizing Steel building products.
Spray or Dip Painting All metal products.
Electropainting Automotive components.
-------
ENVIRONMENTAL PROTECTION AGENCY
STUDY OF ECONOMIC IMPACT OF POLLUTION ABATEMENT
ON METAL FINISHING INDUSTRY
ELECTROPLATING AND OTHER PLATING OPERATIONS IN
METALWORKING OPERATIONS
Number of Establishments
Cc^de
1925
1929
1931
1951
1999
34 n
3423
3425
3429
343!
3432
3433
3441
3442
3443
3449
3 it 51
3498
3519
354J
3559
3562
3564
)566
3569
3572
3573
3574
3576
Industry
Complete Guided Missiles
Ammunition
Tanks and Tank Components
Small Arms
Small Arms Ammunition
Guns, Howitzers and Ordnance Access.
Cutlery
Hand and Edge Tools
Hand Saws and Saw Blades
Hardware
Metal Sanitary Ware
Plumbing Fittings and Brass Goods
Heating Equipment
Fabricated Structural Steel
Metal Doors, Sash and Trim
Fabricated Plate Shop - Boiler Shops
-meet Metalwork
Architectural Metalwork
Miscellaneous Metalwork
Screw Machine Products
*olts, Nuts, Rivets and Washers
Metal Stampings
j iieo and Vaults
Si_eel Snringo
Valve? and Pipe Fittings
Fabricated Pipe and Fitting
Fabricated Metal Products
Steatr. Engines and Turbines
Internal Combustion Engine
M3'-nine Toolc
ue.cjdi Dies, Tools, Jigt. and Fixtures
'act ine lool Accessories
Mr-t.M Working Machinery
V.'oua.,urging Mac^ -nery
Special Industry Machinery
Ball & Roller Bearing
Blowers ami Fans
Power Transmission F^uipraent
General Industry
"> oowriters
iI .'C -.rotvu uo:m> :tinfc -^qu.L^"eut
Calculating and Accounting Maob.^ery
Sc'il"3 and Balances
Electroplating and
Number of
Establishments
12
11
4
7
4
9
15
57
8
•137
4
39
7
3
20
7
12
3
3
20
84
119
2
2
34
11
42
2
14
5
29
32
16
10
23
11
4
16
10
7
25
Metal
Finishing
Number of Production Workers
1 to 4 5
.
7
1
4
1
5
9
32
6
45
1
12
3
1
5
7
9
3
2
16
44
61
2
24
8
25
1
6
5
21
22
11
3
15
4
3
13
7
_
8
to 19
6
3
3
2
2
3
4
21
2
5o
1
13
3
1
7
_
3
4
28
37
2
9
2
10
1
4
7
10
5
4
8
6
I
1
2
3
1?.
20 or More
6
1
_
1
1
1
2
4
36
2
14
1
1
8
_
1
12
21
1
1
1
4
i
3
1
2
1
4
5
Employment
Metal Finishing
Employees
417
78
A
86
53
82
112
357
31
3,120
A
681
52
29
511
9
30
5
A
74
856
1,230
A
A
163
93
194
A
253
11
139
115
66
129
314
69
17
82
44
27
205 CM
A "*
A ,.
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-------
STUDY OF ECONOMIC IMPACT OF POLLUTION ABATEMENT
ON METAL FINISHING INDUSTRY
ELECTROPLATING AND OTHER PLATING OPERATIONS IN
METALWORKING OPERATIONS
SIC
Code
3579
3581
3582
3585
3589
3599
3611
3613
3621
3622
3631
3132
3633
3634
3635
3636
3639
3642
3643
3644
3651
3661
3662
3671
3672
3673
3674
3679
3694
3711
3713
3714
3721
3722
3729
3751
3791
3799
3811
3821
3822
3871
3872
Industry
Office Machines
Automatic Merchandising Machines
Commercial Laundry Equipment
Refrigeration Machinery
Service Industry Machines
Miscellaneous Machinery
Electric Measuring Equipment
Switch Gear and Switchboard Apparatus
Motors and Generators
Industrial Controls
Household Cooking Equipment
Household Refrigerators and Freezers
Household Laundry Equipment
Electric Housewares and Fans
Household Vacuum Cleaners
Sewing Machines
Household Appliances
Lighting Fixtures
Current Carrying Wiring Devices
Non-Current Carrying Wiring Devices
Radio and TV Receiving Sets
Telephone and Telegraph Apparatus
Radio and TV Communication Equipment
Electron Tubes Receiving Set
Cathode Ray Picture Tubes
Electron Tubes, Transmitting
Semi Conductors
Electronic Components
Engine Electrical Equipment
Motor Vehicles
Truck and Bus Bodies
Motor Vehicles Parts and Accessories
Aircraft
Aircraft Engines and Engine Parts
Aircraft Equipment NEC
Motorcycles, Bicycles and Parts
Trailer Coaches
Transportation Equipment
Engineering and Scientific Instruments
Mechanical Measuring Devices
Automatic Temperature Controls
Watches and Clocks
Watchcases
Number
of
Electroplating
Number of Numb
Establishments
9
8
5
14
7
107
37
80
29
17
8
3
6
36
4
5
2
75
40
13
14
25
114
3
2
14
38
184
24
10
1
98
23
37
73
9
1
4
22
35
17
17
12
2^38^ i
1 to
2
6
4
7
7
73
21
52
20
6
4
1
12
3
1
35
21
6
7
5
51
1
7
18
107
11
3
1
40
6
17
35
1
1
2
20
23
7
5
6
J.07
Establishments
and Other Plating
er of Production Workers
4 5 to 19 20 or More
6
2
1
7
27
11
22
9
6
2
3
12
2
30
13
4
5
8
38
2
1
6
15
56
10
4
32
9
7
23
5
A
1
2
7
8
8
6
704
1
7
5
6
5
2
3
2
12
4
1
10
6
3
2
12
25
1
1
5
21
3
3
26
8
13
15
3
A
1
-
5
2
4
-
356
Employment
Note: A - Not Available - Information suppressed to protect specific plants in survey.
Source: 1967 Census of Manufactures
Metal Finishing Number
Employees
1
1
1
1
2j
123
34
14
81
16
592
286
583
132
262
106
106
111
607
105
A
A
754
431
178
277
615
,583
A
A
109
428
,611
242
A
A
,699
760
,353
759
300
A
A
58
290
163
276
61
^474
1 to 4
A
A
A
14
16
122
39
102
39
10
11
A
28
.
A
A
62
141
17
17
11^
92
A
21
39
201
23
A
A
78
10
38
70
A
A
4
A
36
18
7
10
2,085
of Production Workers
5 to 19
A
A
A
67
218
85
224
93
54
A
A
133
-
A
282
133
55
D
73
360
A
A
A
152
540
93
39
288
96
59
201
A
A
A
69
A
84
51
1^529
20 or More
A
A
232
162
257
198
A
106
A
446
105
A
A
410
257
106
D
531
1,131
A
A
237
1,070
126
A
1,333
654
1,256
488
256
A
185
A
185 t-rj
pj
TO
15,692 ft)
O
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-------
ENVIRONMENTAL PROTECTION AGENCY
STUDY OF ECONOMIC IMPACT OF POLLUTION ABATEMENT ON
METAL FINISHING INDUSTRY
GALVANIZING AND OTHER HOT DIP COATING OPERATIONS IN METALWORKING INDUSTRY
Employment
SIC
102-
.931
3429
3,33
3*. it
344?.
344t>
3451
'<<, 52
i4ol
3 4 PI
34 1 '
jf> i j
'.£34
Industry __
••-••ir.£te Guided Missiles
.-v'ui aition
TdnK3 and Tank Components
:" fv; 1 1 Arras
uu~s, Howitzers and Ordnance Access.
Kf» L Jwarc
Heating Equipment
Fabricated Structural Steel
Ntcal Doors, S^sh and Trim
Fabricated Plate Shop-Boiler Shops
Fhr-et Metalwork
.architectural Metalwork
Mi .cellaneous Metalwork
Screw Machine Products
ol*, Nuts, Rivets and Washers
Mi< .pllaneous Fabricated Wire Products
Metal Barrels, Drams, and Pails
'.'j'lves and ?ipp Fittings
p-»bncated Pipe and Fittings
!'--}'->rlcated M»tal Products
S-^'.-til Ind'JSi-Ty Machinery
Pitiius ani1 Cormrassors
."!rwerf. and Far.s
11 owe r Transmission ^ouipment
r?n..-r-il Tnd-is-ry Machinery
rir-i crnnic Ccwruting Equipment
._' '.*rc ti.la1 La j rjry rquifjT.fnt
T>r 'V\f>T;.tion :-\s.-, i-erv
.v';t •. uiiii*,, inr. Dip pens !'•', Pumps
4.. e Ia<-"" fy Mac".''es
;-'.' .. • .. ana •,.- •••>>•• to-..
r'ousfc!"- J
:!ou!.e .old
0 w r " ~ ; Devi.. •'
. vitig U1 rl'-£ Dt • "t.-
It. !ecr'. -,;'i AP.JCJ -LUS
Tctal
Establishments
3
6
2
4
4
10
1
15
1
10
27
2
2
4
16
24
31
1
17
8
8
8
8
2
1
4
2
1
8
4
^
Number
1-4
1
_
3
3
5
1
2
1
6
21
1
2
4
7
lu
21
_
7
3
6
,
1
1
4
2
i
1
1
4
1
of Production
5-19 20
1
5
2
_
-
4
_
3
_„
2
6
1
_
_
9
8
7
1
6
5
2
1
_
_
_
_
_
1
_
'<
Workers
or More
2
-
„
1
1
1
-
10
_
2
-,
-
_
_
_
6
3
_
4
,.
-
1
-
_
_
_
_
1
_
1
11
1
Number of Production Workers
Total
Employees
103
53
A
A
27
156
A
428
A
106
85
A
A
6
82
282
173
A
176
38
32
12
32
A
A
7
A
A
116
A
8
59
A
A
A
A
1
5
31
72
A
A
7
1-4
A
A
A
13
A
A
A
17
43
A
A
6
12
18
42
14
7
A
12
A
A
A
7
A
A
A
A
8
A
A
_
A
_
A
8
7
A
A
5-19 20 or Mort
A A
A
A
A
A
A A
A 396
A A
42
A
70
59 205
51 80
A
59 103
31
A
A
A
A
A
_
A A
_
A
— -
A - T;
A - a
23 - ^
30 681 ™
^j
A
0
hh
rjj
»><
5d
» j
? ' i
M
H
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-------
STUDY OF ECONOMIC IMPACT OF POLLUTION ABATEMENT ON
METAL FINISHING INDUSTRY
GALVANIZING AND OTHER HOT DIP COATING OPERATIONS IN METALWORKING INDUSTRY
Number of Establishments
SIC
366 i
36/3
367n
3679
3694
3711
37i:
3714
3715
3721
3722
3729
3791
Industry
Radio and TV Communication Equipment
Electron Tubes, Transmitting
Scmiconduc tors
£-le<'t-:-nic Components
tngine Electrical Equipment
Motor Vehicles
Truck and Bus Bodies
Motor Vehicle Parts and Accessories
Truck Trailers
Aircraft
Aircraft Engines and Engine Parts
Aircraft Equipment NEC
Trailer Coaches
Total
Establishments
24
2
2
31
6
2
3
20
1
8
6
6
1
394
Number
1-4
17
2
1
29
3
_
1
10
_
1
4
3
1
of Production
5-19 20
3
_
1
2
3
1
1
7
1
1
1
2
_
Workers
or More
4
_
_
_
_
i
i
3
_
6
1
1
_
Employment
Number of Production Workers
Total
Employees
281
A
A
64
33
A
A
680
A
354
A
67
A
1-4
29
A
A
A
4
_
A
16
_
A
A
5
A
5-19
38
-
A
A
29
A
A
A
A
A
A
A
-
20 or More
214
_
_
_
_
A
A
A
_
A
A
A
-
231
62.
4.233 26JL 441
Note: A - Not Available - Information suppressed to protect specific plants in survey.
03
OQ
(D
tx>
M
H
Ctl
-------
ENVIRONMENTAL PROTECTION AGENCY
STUDY OF ECONOMIC IMPACT OF POLLUTION ABATEMENT ON
METAL FINISHING INDUSTRY
PAINTING, LACQUERING AND ENAMELING ON METALS OPERATIONS IN METALWORKING INDUSTRY
Number of Establishments
SIC
Code
1925
1929
1931
1951
1961
1999
3411
3421
3423
3425
3429
3431
3432
3433
3441
3442
3443
3444
3446
3449
3451
3452
3461
3481
3491
3492
3493
349i
3496
3497
3498
3499
3511
3519
3522
3531
3532
3533
3534
3535
Industry
Goir.i.lete Guided Missiles
Ammunition
Tanks md Tank Components
Small Arms
Snail Arms Ammunition
Guns, Howitzers and Ordnance Access.
Metal Cans
Cutlery
Hind and Edge Tools
Handsaws and Saw Blades
Hardware
Metal Sanitary Ware
Plumbing Fittings and Brass Goods
Heating Equipment
Fabricated Structural Steel
Metal Doors,Sash and Trim
Fabricated Platework-Boiler Shops
Sheet Metalwork
Architectural Metalwork
Miscellaneous Metalwork
Screw Machine Products
Bolts, Nuts, Rivets and Washers
Metal Stampings
Miscellaneous Fabricated Wire Products
Metal Barrels, Drums and Pails
Safes and Vaults
Steel Springs
Valves and Pipe Fittings
Collapsible Tubes
Metal, Foil and Leaf
Fabricated Pipe and Fittings
Fabricated Metal Products
Steam Engines and Turbines
Internal Combustion Engines
Farni Machinery
Con-3 ruction Machinery
Mining Machinery
Dilfield Machinery
Elevators and Moving Stairways
Coi'veyors and Conveying Equipment
Total
Establishments
20
36
10
10
2
20
102
16
115
20
238
20
12
169
511
153
357
291
169
82
20
26
385
236
91
15
37
133
13
1
44
219
14
55
567
260
62
99
48
157
Number
1-4
7
12
4
5
_
16
14
14
91
15
168
6
9
113
412
112
303
230
139
51
19
22
206
208
47
12
29
116
_
—
40
171
9
30
433
177
47
82
38
141
of Production
5-19 20
6
10
1
5
I
3
35
2
22
4
50
3
3
39
80
34
42
50
26
23
1
2
101
24
31
1
8
14
3
1
4
39
2
15
96
65
14
15
8
16
Workers
or More
7
14
5
_
1
1
53
_
2
1
20
11
_
17
19
7
12
11
4
8
_
2
78
4
13
2
_
3
10
_
_
9
3
10
38
18
1
2
2
_
Employment
Number of Production Workers
Total
Employees
3
2
1
1
1
1
1
5
3
1
372
805
201
53
A
80
,479
43
408
83
,058
,329
37
,046
,930
696
,281
,127
550
573
36
95
,986
732
905
110
112
402
915
A
103
964
134
538
,319
,75/
231
313
236
334
1-4
19
17
A
8
_
30
36
A
154
26
274
10
14
190
644
193
521
389
207
103
A
33
396
328
104
A
49
222
_
_
71
281
18
54
727
321
66
150
72
226
5-19
60
106
A
45
A
A
337
A
A
A
439
23
23
331
682
295
344
436
199
176
A
A
910
220
289
A
63
98
44
A
32
305
A
128
844
619
A
A
A
108
20 or More
293
682
185
_
A
A
3,106
_
A
A
1,345
1,296
_
525
604
208
416
302
144
294
_
A
4,680
184
512
A
_
82
871
„
_
378
A
356
1,748
817
1 »
A no
Auv
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-------
STUDY OF ECONOMIC IMPACT OF POLLUTION ABATEMENT ON
METAL FINISHING INDUSTRY
PAINTING, LACQUERING AND ENAMELING ON METALS OPERATIONS IN METALWORKING INDUSTRY
STC
Code
3536
3^57
3541
3542
3544
3545
3548
3551
3552
3553
3554
3555
3559
3561
3562
3564
3 = (-5
l'.jf h
3367
3569
3r-72
I; 7 3
3574
3575
3579
3581
3532
J535
3586
3339
3599
3611
3612
3613
3621
3622
3623
3635
3636
Number of F.stablishments
Industry
Hoists, Cranes and Monorails
Industrial Trucks and Tractors
Machine Tools, Metal-Cutting Types
Machine Tools, Metal-Forming Types
Special Dies, Tools, Jigs and Fixtures
Machine Tools Accessories
"•letalworking Machinery
Food Products Machinery
Textile Machinery
Woodworking Machinery
Paper Industries Machinery
Printing Trades Machinery
Special Industry Machinery
Pumps and Compressors
Kail and Roller Bearings
Blowers and Fans
Industrial Patterns
Power Transmission Equipment
Ivriuslsrlal Furnaces and Ovens
Gereril Industry Machinery
Typewriters
Electronic Computing Equipment
Calculating and Accounting Machines
Scales and Balances
Office Machines NEC
Automatic Merchandising Machines
Commercial Laundry Equipment
Refrigeration Machinery
Measuring and Dispensing Pumps
Service Industry Machines
Miscellaneous Machinery, Except Electrical
Electric Measuring Instruments
Transformers
Switchgear and Switchboard Apparatus
Motors and Generators
Industrial Controls
Wt JHing Apparatus
C.Vrbcm and Graphite Products
Electrical Industrial Apparatus, NEC
household Cooking Equipment
H'/usehold Refrigerators and Freezers
Household Laundry Equipment
Electric Housewares and Fans
H.""i3fhold Vacuum Cleaners
r-l:-"3r>g Machines
Total
Establishments
51
108
142
70
91
58
79
181
84
69
50
69
232
182
9
81
11
66
70
172
9
28
16
22
27
29
41
221
16
102
410
100
72
150
127
88
38
1
46
28
20
16
57
9
7
Number
1-4
43
89
89
60
88
52
65
162
64
62
46
50
204
152
8
67
9
59
63
150
3
14
7
15
13
14
32
142
9
92
381
74
44
W-j
80
71
33
1
40
2
4
1
25
3
7
of Production Workers
5-19
6
15
43
10
3
5
12
16
14
4
4
18
26
26
1
11
2
7
7
21
1
10
6
6
12
12
8
55
4
7
26
22
21
34
37
1?.
5
-
5
8
1
3
25
3
_
20 or More
2
4
10
_
_
1
2
3
6
3
_
1
2
4
_
3
_
_
_.
1
5
4
3
1
2
3
1
24
3
3
3
4
7
7
10
5
_
_
1
18
15
12
7
3
_
Employment
Number of Production Workers
Total
Employees
197
358
871
172
121
148
274
436
363
224
113
275
597
713
20
449
20
143
134
398
221
250
248
90
212
213
147
1,812
136
324
798
403
550
732
721
438
109
A
117
1,744
2,799
1,976
507
152
14
1-4
64
142
151
84
103
92
97
240
86
91
80
77
296
256
A
107
A
93
91
204
A
24
14
25
22
32
57
244
11
150
510
118
71
205
140
105
57
A
64
A
A
A
44
5
14
5-19
A
119
397
88
18
A
A
128
116
A
33
A
A
196
A
A
A
50
43
A
A
82
A
A
A
A
A
509
40
70
A
166
210
288
274
107
52
„
A
A
A
A
248
44
_
20 or More
A
97
323
_
_
A
A
68
161
A
_
A
A
261
_
A
_
_
_
A
199
144
A
A
A
A
A
1,059
85
104
A
119
269
239
307
226
_
_
A
1 628 ""^ M
•>°781 a X
*. j / uj. rtcj *~f*
1,950 u£ i
215 £
103 rojM
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1
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STUDY OF ECONOMIC IMPACT OF POLLUTION ABATEMENT ON
METAL FINISHING INDUSTRY
PAINTING, LACQUERING AND ENAMELING ON METALS OPERATIONS IN METALWORKING INDUSTRY
SIC
Code
Industry
3639 Household Appliances
3642 Lighting Fixtures
3643 Current-Carrying Wiring Devices
3644 Noncurrent-Carrying Wiring Devices
3651 Radio and TV Receiving Sets
3661 Telephone and Telegraph Apparatus
3662 Radio and TV Communication Equipment
3671 Electron Tubes, Receiving Type
3672 Cathode Ray Picture Tubes
3673 Electron Tubes, Transmitting
3674 Semiconductors
3679 Electronic Components, NEC
3691 Storage Batteries
3693 X-Ray Apparatus and Tubes
3694 Engine Electrical Equipment
3699 .Electrical Equipment, NEC
3711 Motor Vehicles
3713 Truck and Bus Bodies
3714 Motor Vehicle Parts and Accessories
3715 Truck Trailers
3721 Aircraft
3722 Aircraft Engines and Engine Parts
3729 Aircraft Equipment, NEC
3731 Ship Building and Repairing
3732 Boat Building and Repairing
3741 Locomotives and Parts
3742 Railroad and Street Cars
3751 Motorcycles, Bicycles and Parts
3791 Trailer Coaches
3799 Transportation Equipment, NEC
3811 Engineering and Scientific Instruments
3821 Mechanical Measuring Devices
3822 Automatic Temperature Controls
Total
Establishments
33
316
26
35
30
29
242
2
1
14-
10
165
8
19
46
20
84
187
258
73
34
40
140
28
68
9
47
24
51
94
97
139
21
Number of Establishments
Number
1-4
21
192
20
20
16
6
178
2
_
12
4
139
10
35
17
12
138
175
46
8
25
92
12
47
6
18
9
44
71
78
112
12
of Production
5-19 20
3
95
5
10
11
13
40
_
1
1
4
21
6
10
3
12
33
59
21
6
9
31
5
18
_
13
6
3
22
17
18
5
Workers
or More
9
29
1
5
3
10
24
_
_
1
2
5
3
1
_
60
16
24
6
20
6
17
11
3
3
16
9
4
1
2
9
4
Employment
Number of Production Workers
Total
Employees
500
2,553
96
333
297
540
1,710
A
A
85
234
545
13
175
172
46
14,909
1,288
1,988
508
3,345
564
1,571
1,494
390
166
1,159
377
378
356
330
607
183
1-4
36
351
29
41
42
11
281
A
_
A
7
219
13
16
61
22
16
256
295
76
14
57
168
19
88
6
30
18
A
135
121
175
23
5-19
25
910
A
85
116
138
360
-
A
A
A
143
_
53
A
24
108
276
542
209
73
77
243
48
142
_
115
59
A
A
A
146
60
20 or More
439
1,292
A
207
139
391
1,069
-
-
A
A
183
_
106
A
_
14,785
756
1,151
223
3,258
430
1,160
1,427
160
160
1,014
300
A
A
A
286
100
821
Note: A - Not Available - Information suppressed to protect specific plants in survey.
Source: 1967 Census of Manufactures.
TJ
05
OQ
O
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M
1-3
U3
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ECONOMIC IMPACT OF POLLUTION ABATEMENT ON
METAL FINISHING INDUSTRY
SUMMARY OF IN-PLANT METAL FINIS)'.INC OPERATIONS
Number
357}
3574
3576
3579
3581
3582
;585
'1586
3589
3599
3£i3
3621
3622
3623
362'.
36>9
363i
3632
3633
3634
3635
J636
3639
3641
3642
1643
3644
3651
36ol
3662
3671
3672
3673
3674
3679
3691
3692
369^
3694
3699
3711
•:]3
,71-4
j/15
3721
j?22
3729
3731
3732
3741
3742
3751
3791
3799
3811
382!
38.-.'
3871
3871'
Industry
Electronic Computing Equipment
Calculating and Accounting Machines
Scales and Balances
Office Machines, NEC
Automatic Merchandising Machines
Commercial Laundry Equipment
Ref.iteration Machinery
Measuiing and Dispensing Pumps
S~>-vice Industry Machines, NEC
Miscf1laneous Machinery, except Electrical
Klw.'rrlc Measuring Instruments
Ti in.^iGrmers
SwiLchgear and Switchboard Apparatus
Motors and Generators
Industrial Controls
Welding Apparatus
Carbon and Graphite Products
Electrical Industrial Apparatus, NEC
riousenold Cooking Equipment
HonseVuld Refrigerators and Freezers
Household Laundry Equipment
Flectric Housewares and Fans,
tliu^t-'.^Ld Vacuum Cleaners
Sc-ving ii;.i<.hines
Household Appliances, NEC
E-Uctric Lamps
Lighting Fixtures
CuiTent-Carrying Wiring Devices.
Concurrent-Carrying Wiring Devices
R?;iio and TV Receiving Sets
Telephone and Telegraph Apparatub
Radio and TV Communication Equipment
Cjjctron Tubes, Rsceiving Type
Cathode Ray Picture Tubes
Electron Tubes, Transmitting
Semiconductors
Electronic Components, NEC
Storage Batteries
V '-fiary Batteries, Dry and Wet
X-Kay Apparatus and Tubes
Engine Electrical Equipment
Electiical Equipment, NEC
Mo? or Vehicles
Truck, and Bus Bodies
.*! ^r Vehicle Parts and Accessaries
Tru.. K "railers
4.- ..uc
Aircrair Engines and Engine tarts
Aircratr. Equipment, NEC
Ship Building and Repairing
Boat Building and Repairing
Locomotives and Parts
^j.'road and Street Cars
Motorcycles, Bicycles and Parts
!i L. itp]o-*..^ s
28
16
22
27
29
41
221
16
102
410
100
72
150
127
88
1
46
28
20
16
57
9
7
33
316
26
35
iC
29
242
2
1
14
10
165
8
19
46
20
84
187
258
73
34
40
i 40
108
68
Q
47
24
51
94
97
139
21
ik^
25<
94'!
~90
212
213
14?
1,512
!36
324
798
403
', ~
73'
71*.
^0
A
117
1,744
2,799
1,976
so;
152
14
500
2,553
96
333
?97
^3
i , no
A
A
85
234
545
13
i'l
172
46
14,909
i , 23,;
1,98-
501
< , " ;
1 ,'T"
4.19U
390
166
1 ^ i c n
3 / /
3,..
?5r
^>0
ofl.
18.J T^
Q}
CT5
O
Hi
X
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-------
l-WIRDNMENIAL PROTECTION AGENCY
f.i'ONOMIC IMPACT Of POLLUTION ABATEMENT ON
METAL FINISHING INDUSTRY
SUMMARY OF IN-PIANT METAL FINISHING OPERATIONS
SIC
Number
1925
1929
1931
1951
1961
1999
3321
3322
3323
3361
3362
3369
3391
3392
3411
3421
3423
3425
3429
3431
3432
3433
3441
3442
3443
3444
3446
3449
3431
3452
3461
3481
3491
3492
3493
3494
3496
3497
3498
3499
3511
3519
3522
3531
3532
3533
3534
3535
3536
3537
3541
3542
3544
3545
3548
3551
3552
3553
3554
3555
3559
3561
3562
3564
3565
3566
3567
3569
3572
Industry
Complete Guided Missiles
Ammunition, Except for Small Arms, NEC
Tanks and Tank Components
Small Arms
Small Arms Ammunition
Guns, Howitzers, and Ordnance Access.
Orav Iron Foundries
Malleable Iron Foundries
Steel Foundries
Aluminum Castings
Brass, Bronze, Copper Castings
Nonfcerrous Castings, NEC
Iron and Steel Forgings
Nonferrous Forgings
Metal Cans
Cutlery
Hand, and hdge Tools, NEC
Handsaws and Saw Blades
Hardware, NEC
Metal Sanitary Ware
Plumbing Fittings and Brass Goods
Heating Equipment, except Electric
Fabricated Structural Steel
Metal Doors, Sash and Trim
Fabricated Platework-Boiler Shops
Sheet Metal
Architectural Metalwork
Miscellaneous Metalwork
Screw Machine Products
Bolts, Nuts, Rivets and Washers
Metal Stampings
Miscellaneous Fabricated Wire Products
Metal Barrels, Drums and Pails
Safes and Vaults
Steel Springs
Valves and Pipe Fittings
Collapsible Tubes
Metal, Foil and Leaf
Fabricated Pipe and Fittings
Fabricated Metal Products, NEC
Steam Engines and Turbines
Internal Combustion Engines, NEC
Farm Machinery
Construction Machinery
Mining Machinery
0iIfield Machinery
Elevators and Moving Stairways
Conveyors and Conveying Equipment
Hoists, Cranes and Monorails
Industrial Trucks and Tractors
Machine Tools, Metal-Cutting Types ,
Machine Tools, Metal-Forming Types
Snecial Dies, Tools, Jigs and Fixtures
Machine Tool Accessories
Metalworking Machinery, NEC *
Food Processing Machinery
Textile Machinery
Woodworking Machinery
Paper Industries Machinery
Printing Trades Machinery
Special Industry Machinery, NEC
Pumps and Compressors
Ball and Roller Bearings
Blowers and Fans
Industrial Patterns
Power Transmission Equipment
Industrial Furnaces and Ovens
General Industry Machinery, NEC
Typewriters
Total
Industry
Establishments Employees
1
1
1
1
1
3
1
1
2
1
1
1
6
1
1
1
417
,061
81
296
992
534
360
272
41
299
146
667
85
,041
91
214
533
,960
,646
,465
,054
,377
649
,874
662
,710
,550
149
32
114
666
19
72
393
,266
27
155
,61P
651
212
360
144
446
141
351
903
350
615
,141
430
642
560
239
220
522
,129
660
124
287
,163
513
255
758
25
400,400
13s,noo
25,400
69,200
45,200
17,900
26,600
41,200
10,100
60,300
13,000
35,900
6,300
100,800
10,100
14,500
40,600
107,500
63,900
96,400
68,100
19,300
32,700
49,000
67,200
225,900
60,200
11,600
3,800
7,700
95,300
4,300
6,600
18,200
41,300
36,200
63,700
136,300
133,100
21,700
32,700
13,900
27,400
16,800
27,000
87,200
29,200
113,600
60,300
46,700
32,600
39,700
12,700
21,300
29,200
71,300
78,300
58,800
21,000
10,900
54,800
16,100
39,400
26,000
Plants Over Ten
Establishments
1'
871
76
265
572
333
230
218
37
270
86
342
61
616
65
116
322
1,430
871
1,029
1,341
347
348
1,057
483
1,825
822
112
23
76
501
18
53
264
683
21
111
886
426
148
225
99
283
96
203
505
223
2,846
630
249
366
308
119
146
254
680
392
108
172
314
376
150
460
20
Employees
Employees
400,100
137,400
25,400
69,100
43,800
17,200
26,100
41,000
10,100
60,200
12,800
34,900
6,200
99,500
10,000
14,300
39,900
105,400
61,400
94,900
62,800
16,600
31,700
46,100
66,600
222,700
57,700
11,500
3,800
7,500
94,800
3,900
6,600
17,800
39,500
36,000
63,600
134,300
132,400
21,500
32,400
13,700
26,900
16,700
26,500
85,800
28.800
101 ',200
58,600
46,200
31,700
38,900
12,200
21,000
28,400
70,000
77,500
58,800
20,600
8,600
54,400
15,900
38,400
26,000
Electroplating and
Other Plating
Establishments Emp
12
11
4
7
4
9
15
57
8
137 3
4
39
7
3
20
7
12
3
3
20
84
119 1
2
2
34
11
42
2
14
13
5
29
16
10
23
11
4
16
10 *
7
loyees
417
78
A
86
53
82
112
357
31
,120
A
681
52
29
511
9
30
5
A
74
856
,230
A
A
163
93
194
A
253
96
11
139
66
129
114
69
17
82
44
279
Galvanizing
Hot Dip
Es tablishments
3
6
2
4
4
10
1
15
1
10
27
2
2
4
16
24
31
1
17
8
8
8
8
2
1
4
and Other
Coating
Employees
103
53
A
A
27
15
A
426
A
106
85
A
A
6
82
282
173
A
176
38
32
12
32
A
A
7
Painting
and
, Lacquering
Enameling
Establishments Employees
20
36
10
10
2
20
102
16
115
20
238
20
12
203
511
153
357
291
169
82
20
26
385
236
91
15
37
133
13
1
44
219
14
55
567
260
62
99
48
157
51
108
142
70
91
58
79
181
84
69
50
69
232
261
80
81
11
66
70
172
9
372
805
201
53
A
80
3,479
43
408
83
2,058
1,329
37
1,359
1,930
696
1,281
1,127
550
573
36
95
5,986
732
905
110
112
402
915
A
103
964
134
538
3,319
1,757
231
313
236
334
197
358
87l
172
121
148
274
436
363 >-ti
224 Q)
113 (JO
"5 n
597 »
7,248
6,385 M
449
20 Q
143 H,
134 "!
398
221 M
£rj
s^
+3*
*-*—!
M
W
M
*"~3
*r-w
t">
I
Ln
-------
APPENDIX B
IMPACT SEGMENTATION FACTORS
-------
APPENDIX B
Page 1 of 9
APPENDIX B
IMPACT SEGMENTATION FACTORS
Relevant methods of segmenting the metal finishing indus-
try which could lead to differential economic impact on esta-
blishments are discussed in this appendix.
Metal finishing establishments can be categorized by firm
and plant characteristics. The most common characteristics are:
"Independent" versus "Captive" Establishments.
Level of Integration.
Multi or Single Plant Operations,,
Product Differentiation
Number of Products„
Level of Diversification0
Level of Specialization.
Level of Automation^
Production Capacity.
Establishment and/or Firm Size.
Type of Processo
Point of Discharge.
Space Constraints.
The relevance of segmenting firms by these subcategories is
discussed in the following paragraphs„
-------
APPENDIX B
Page 2 of V
"INDEPENDENT" VERSUS
"CAPTIVE" ESTABLISHMENTS
"Independent" operations are those which offer commercial
services in the marketplace. "Captive" operations are those
establishments which are owned and operated by a business for
their own internal use and any sale of commercial services is
incidental. The captive metal finishing operation is consi-
dered to be only one step in the manufacturing process of the
owning firm. Industry data is not available which identifies
all captive metal finishing establishments. Therefore., no
basis exists to segment the industry by independent and cap-
tive establishments for the analysis of economic impact. How-
ever, this distinction is only important with respect to the
financing capabilities for installing effluent treatment facili-
ties. There are few small captive establishments and it is
the small size establishments which are expected to have
profitability/financing problems. Thus, there does not appear
to be a significant difference in impact for captive versus
independent establishment.
LEVEL OF
INTEGRATION
An integrated metal finishing operation consists of pri-
mary function and other secondary operations, such as, buffing
and polishing. According to this definition, the metal finish-
ing establishments with secondary operations are considered
integrated.
IT)
These are separate captive plants and do not refer to in-plant
processes.
-------
APPENDIX B
Page 3 ot y
Segmenting the industry by level of integration does not
appear relevant for metal finishing establishments, since level
of shop integration would not change as a result of new pollu-
tion controls. Because metal finishing is the primary operation
and the main source of water pollution, other related operations
in metal finishing plants are generally support functions and
would not exist in the absence of the primary operation.
MULTI OR SINGLE
PLANT OPERATIONS
A small number of independent metal finishers operate as
multiplant firms. Multiplant firms tend to operate plants
which employ more than 100 persons. Consequently segmenting
the industry by size of employment in effect places the multi-
plant firms into the large plant group. It is not anticipated
that there will be differential impacts among larger plants.
Therefore, subsegmentation of the industry into single versus
multiplant firms is not considered necessary.
PRODUCT
DIFFERENTIATION
Industry sources indicate little relationship exists
between the number of products and the extent of pollution pro-
blems. A more relevant measure would be the physical shape of
the product since products which drain poorly create greater
drag-out problems, hence greater potential pollution. It would
certainly be desirable to identify plants which have the major
drag-out problems caused by the product design. However,
-------
•• ?ENDIX £
industry ^dt_a is not compiled in this manner
LEVEL OF
DIVERSIFICATION
The metal finishing industry is dominated by establishments
which have more than a single metal finishing process. This is
partially because these metal finishing establishments maintain
multiple metal finishing lines to provide a full service to
their customers. However, available industry data cannot be
segmented by level of diversification.
LEVEL OF
SPECIALIZATION
The National Association of Metal Finishers states that
approximately 15 percent of its membership is comprised of es-
tablishments which state that they are specialists. Although
an establishment may be classified as specializing in one metal
finishing process, technical requirements often require that
the establishment employ more than one process. For example,
a precious metal plating establishment often must precondition
the base metal prior to applying the final precious metal finish.
In effect, this shop would be a multiple metal finishing plant.
Although, multiple waste stream plants would be expected to
create a more complex pollution control problem and probably
incur higher costs to meet the effluent guidelines than single
stream plants, this distribution cannot be obtained because
data is not available0
-------
APPENDIX
LEVEL OF
AUTOMATION
The metal finishing industry can be segmented according to
the degree of automation. However, the number of automated
plants versus manual plants is not available from known studies,
Kearney industry interviews indicate that very few small
metal finishing establishments are automated. The primary
reason for this is that a large capital investment is required
to purchase automated equipment. Automation tends to be more
extensive in larger plants with over 40 - 50 employees and in
the captive segment where production runs are either long, or
products are very similar.
PRODUCTION
CAPACITY
Metal finishing plants can be further categorized by pro-
duction capacity. The three most common measures of production
capacity are:
1. Number of units metal finished.
20 Units of production expressed as square feet of
metal finishing output.
3. Rated capacity of plants in terms of ampere hours
of rectifier capacity in plating operations.
It is probable that shops which have a large volume of out-
put, also are potentially larger polluters. The relevance of
segmenting firms by the above measures of production will be
discussed in r,h .i following paragraphs .
-------
APPENDIX B
Fage b ot V
(a) Number of Units
Metal Finished
The metal finishing industry is highly diverse and serves
a large number of industries with a myriad of products. Each
product may have a different physical shape and metal finishing
requirements0 Consequently classifying productive output in
units of product metal finished is not a feasible method nor
does it identify the pollution control problems of the plant.
(b) Unit Production in
Area Metal Finished
Although a product can be measured and the surface area
determined, this information is generally not available and
plants surveyed indicated that this information is not commonly
collected or easily obtained in daily operations. Owners are
primarily concerned with the productive capacity of the plant
in terms of barrels, or racks produced per hour, rather than
area covered. Obviously, the surface area in a barrel or on a
rack can vary significantly depending on the shape and size of
the parts being plated.
The amount of production in a plant in terms of square
feet of surface metal finished generally has no relationship
to the number of employees or the sales volume. An example
2
of this is two automatic or manual shops, each plating 200 ft.
per hour of cadmium0 One plant might be plating barrels of
fasteners and the other plant might be plating racks of castings,
The labor needed to rack, plate, and unrack parts is generally
-------
APPENDIX B
£age 7 of y
twice the. labor needed for the barrel plant. Labor is a criti-
cal variable and pricing will reflect the difference. Conse-
quently, sales volume and employment will be higher in the rack
plating plant0
Very little comparison can be made between two plants in
terms of square feet of surface metal finished unless the pro-
ducts are uniformly priced according to the area plated. For
2
example, a plant metal finishing 200 ft0 per hour of flat or
simple shaped parts would probably not be comparable to another
2
plant performing 200 ft3 per hour of engineered metal finishing
where parts have irregular shapes, or require critical masking
and other preparatory work to meet exact metal finishing speci-
fications .
(c) Rated Ampere Hours
by Rectifier Capacity
Rated ampere hours by rectifier capacity is an excellent
gauge of potential capacity in plating plants. However, actual
volume often falls short of rated capacity. Therefore, this is
not a practical unit of measure to use in setting effluent guide-
lines .
ESTABLISHMENT AND/OR
FIRM SIZE
Size of establishment gives rise to serious potential dif-
ferential impact due to diseconomies of scale which arise from
the pollution abatement process at low levels of volume and the
requirements to finance significant new investment. Thus small
-------
A?I'SNDIX T».
firms may be differentially impacted.
Size can be reflected in capacity or activity measures.
The most general measure of activity is sales volume, which
varies directly with the number of employees for the plants
surveyed. These survey interviews further indicate that:
1. Industry pricing is primarily labor based; as more
man-hours are required, the price of plating increases.
2. A relatively few products are priced on basis of
materials or equipment; the exception is precious metals.
3. Support operations, such as buffing and polishing,
add to the cost of the service. If products require extensive
mechanical cleaning, the added labor plus overhead, increases
the sales volume without adding to the number of pieces plated.
Thus, size measured by number of employees is an excellent
classifier of level of activity. On this basis, metal finishing
plants will be segmented by employment size for the analysis of
economic impact.
TYPE OF
PROCESS
Battelle Columbus Laboratories projected different costs
to meet the proposed effluent guidelines for each metal finish-
ing process0 Process types segments can be estimated. Therefore,
metal finishing plants will be segmented by process type for
the analyses of economic impact. However, in terms of the
final economic impact assessment, there may not be much
-------
APPENDIX B
Page y o± y
difference between the six process types.
POINT OF
DISCHARGE
Municipal dischargers may have different effluent treatment
requirements than direct discharges„ Municipal dischargers may
also have user charges to pay in addition to treatment costs.
These cost differences may give rise to differential impacts.
On this basis, metal finishing plants will be segmented by point
of discharge for analysis of economic impact.
SPACE
CONSTRAINTS
Some municipal or urban plants may face higher installation
costs due to the space constraints within the plant. However,
data is not available for identification of these higher cost
urban plants0 Therefore, this criteria was not utilized in seg-
mentation or impact.
-------
APPENDIX C
INTRODUCTION
-------
APPENDIX C
Page 1 oFTO"
APPENDIX C
INTRODUCTION
To establish a baseline forecast the following six para-
meters are estimated for the period 1977 to 1983 in order to
establish the baseline forecast:
1. Total industry production hours (Q ).
2. Customer industry growth (G.; t = years).
3. Employees per establishment by size class
(Ei; i = employee size categories).
4. Market share by size class (Measured by share
of employment).
5. Average hours per size of establishment (q ).
6. Value of shipments per employee.
TOTAL INDUSTRY
PRODUCTION HOURS
The supply characterization of metal finishing can be
described by its relationship to customer growth and sub-
stitute availability. Equation 1 below describes this
relationship.
(1) Q = ai + 3! G + g2 S + el
Q = quantity of service S = substitute availability
as production hours
G = growth of consuming e^ = error term
industry
-------
APPENDIX C
Fage 2 of 10
To utilize this model several assumptions must be made
of the metal finishing industry characteristics. Since the
metal finishing industry does not offer a uniform product
which can be appropriately priced, values for aggregate
services supplied have been considered more meaningful.
Therefore, a unit of service has been defined in terms of
value added.
Substitutes are also considered important in most
industries; however, as previous discussion indicated, most
contemplated substitutes will bear waste treatment costs
similar to the metal finishers. This reduces the possibil-
ity of price competitive substitutes. Also as mentioned in
Section I-C, few substitutes can be utilized. Therefore,
"S" was set equal to 0 for the purposes of developing the
baseline forecast.
Utilizing the 1958 through 1972 Census of Manufactures
data for customer hours and customer growth, a regression
analysis was performed.
The data in Exhibit C-l summarizes the information of
SIC 3471 and 3479 that was utilized. The resulting equa-
tions predicted 1977 and 1983 total services demanded as
industry production hours from the metal finishing industry
for SIC 3471 and 3479. These equations are shown below:
-------
APPENDIX C
Page 3 of 10
(2) (X = 39 x 106 + .0031G
t (26.5)
(3) (X = 13.7 x 106 + .007G
t (7.7)
The T-tests results (shown beneath the coefficient) show
that the coefficients are significant. The coefficients of
2
determination (R ) are .93 and .98 respectively.
The results of this regression which were used for the
baseline forecast appear in Table C-l below.
Table C-l
Forecast Parameters
1977 1983
Production hrs. (Qfc) 114 x 106 134 x 106
Customer growth (G) $ 24 x 109 $ 30.6 x 109
CUSTOMER INDUSTRY
GROWTH (G)
To predict customer industry growth (G) for 1977 and 1983
a linear regression analysis was performed using U.S. Census of
Manufactures data for the aggregate customer industry for the
period 1958 to 1972. Utilizing equation (4) and the data of
Exhibit C-l an estimating equation was derived.
(4) Gt = a3 + £5 t.
G = growth of consumer industry as value added
by manufacture in year "t".
t = time in years
-------
APPENDIX -J
pr— e-r™£-TO"
Those coefficients estimated from the regression are
given in (5) below:
(5) G = 5.2 x 109 + (1.1 x 109)t
(3.3)
From equation (5), which has a coefficient of determin-
ation of .97, estimates of the growth were developed. This
growth trend is based on historical data and is consistent
with projected market conditions which indicate stable growth
as shown in Table II-1. Utilizing the established trend
and 1972 actual levels, the 1977 and 1983 customer levels of
value added by manufacture were obtained of $24 x 109 and
$30.6 x 109 in 1973 dollars. These values are below that
projected from the regression of equation 5 because the 1972
actual values were lower than predicted. This adjustment
improved the estimation accuracy.
EMPLOYEES PER ESTABLISHMENT
BY SIZE CLASS (Et)
The average number of employees per establishment size
category has been changing with time. Thus, this trend is
important in projecting employment in the metal finishing
industry in 1977 and 1983.
Exhibit C-2 presents the employment data collected from
the U.S. Census of Manufactures 1958, 1963 and 1967 reports
SIC 3471 and 3479. As shown in Table C-2 on the following
page, the employment trends are summarized for the metal
finishing industry.
-------
APPENDIX C
Page 5 of 10
Table C-2
Employment Trends in Metal
Finishing Establishments
Establishment
Size by Number
of Employees Average Number of Employees per Establishment
1- 4
5- 9
10- 19
20- 49
50- 99
100-249
250-499
1958
2.02
6.70
13.57
29.62
66.40
145.40
309.60
1963
1.75
6.63
13.72
30.80
68.30
139.30
303.30
1967
1.75
6.68
13.92
30.80
66.50
143.00
322.00
1977
1.44
6.59
13.92
30.80
66.50
156.00
347.00
1983
1.27
6.59
13.92
30.80
66.50
164.50
364.00
Source: Exhibit C-2
From the table note the following:
1. The average number of employees per firm is
decreasing for establishments of 1.to 9 employees, which
indicates that the smallest firms are being adversely affec-
ted by diseconomies of scale.
2. For establishments of 10 to 99 employees, the
average age number per form remains relatively constant.
3. The establishments of over 100 employees are
increasing in average number per firm.
4. As establishments expand to gain economies of
scale one can expect the larger firms to increase. Since the
sample size is so small for the large firms (10 establishments
with over 250 employees), the average number of employees per
firm fluctuates in data presented in Exhibit C-2. However,
the projection presents increasing averages for large firms
since all market trends confirm the growth of large establish-
men t s.
-------
APPENDIX C
'
(d) Average Market Share
By Size Class
Trends in market share by value of shipments in Section VI-A
showed the decreasing market share of small establishments and
increasing share of large ones. In forecasting the future
market share these trends were utilized. Describing the market
share as employment percentage which compares favorably with
vlaue of shipments percentage, the following table C-3 was
constructed from Exhibit C-3 for the metal finishing industry.
Table C-3
Employment Percentages by Establishment Size
Establishment
Size by
Number of
Employees 1967 1977 1983
1
5
10
20
50
100
250
4
9
- 19
- 49
- 99
- 249
- 499
Total
4
6
13
31
18
18
6
100
.0%
.8
.9
.9
.1
.8
.3
.07o
2
3
13
31
18
21
8
100
.3%
.4
.9
.9
.1
.3
.6
.0%
1
3
13
31
18
22
9
100
.3%
.0
.9
.9
.1
.2
.6
.0%
Source: Exhibit C-3.
From this table note that:
1. The employment trends show decreasing market
shares for the 1 to 9 employee establishments.
2. The increasing market share of the large
establishments indicates economies of scale.
-------
APPENDIX C
Page 7 of 10
The market share trends can be measured by trends in em-
ployment share or shipments since both are indicative of the
economic state of a firm in a labor intensive industry. Market
share by employment was utilized for the forecast, and the mar-
ket share results were verified by the value of shipments trend
projection. In Exhibits C-4 and C-5 the market shares were
graphically presented to illustrate the trends in share size.
This trend information is necessary to project the anticipated
metal finishing industry growth to the proper size classes.
(e) Average Production
Hours by Size Class (q )
The average number of production hours is changing
for establishments in the metal finishing industry as their
capacity and market share changes. Since the average number
of employees per establishment size was projected in Exhibit
C-2, the production hours per establishment were projected
utilizing the same trend. In Table C-4, these trends are
summarized.
-------
_
Pa se 8 of
Table C-4
Trends in Average Production Hours per Establishment
Establishment
Size by
Number of
Average Hours per Establishment
Employees
1
5
10
20
50
100
250
4
o
- 19
- 49
- 99
- 249
- 499
SIC
3471
3479
3471
3479
3471
3479
3471
3479
3471
3479
3471
3479
3471
3479
1967
.'"00157
3,100
2,560
11,400
11,510
23,100
22,940
51,450
53,540
111,700
118,200
229,000
262,000
611,000
575,000
1977
(000)
2,650
1,936
11,126
11,038
23,100
22,940
51,450
53,540
111,700
118,300
251,380
285,000
660,000
622,900
1983
(000)
2,363
1,664
10,972
10,755
23,100
22,940
51,450
53,540
111,700
118,300
265,160
300,940
693,500
655,900
Source: U.S. Census of
A. T. Kearney,
Exhibit C-2.
Manufacturers
Inc., 1974
1967
It should be noted that:
1. The average number of production hours per year is
decreasing for the 1 to 9 employee establishment.
2. Additional capacity due to expansion is anticipated
in the larger establishments.
-------
APPENDiXJL
Page 9 of "'0~
(f) Value of Shipments
per Employee
The determination of future value of shipment: requires :
projection of trends for each establishment size. The produc-
tivity per employee has increased and is expected to ri.se a1
a steady rate. U.S. Census of Manufactures data was riompi'!.°d
and is summarized in Exhibit C-6. This data was rtLliied tJ
project the value of shipments for the appropriate ^ize clajts.
FORECAST
MODEL
Utilizing the parameter values which characterizt- the "^t.al
finishing industry and which have been projected for 1977 anu i?33,
the following baseline forecasts have been made:
1. Number of firms. (See Exhibit VI-1 ard VI-2)
2. Number of employees. (°.ee Extubi u VI-3 and VI-4)
3. Value of shipments. (See Exhibit VI-5 ar.d VI-6)
NUMBER OF
FIRMS
To forecast the number of firms per size class the following
calculation must be made:
(Tcral industry market share per ) . sver.ip.a product.! uhment
QT x M
_i = N = Number of Establi -,hmer--ts
qr
QT = Total man-hours worked in metal finishing ind'estry.
N = Numbsr of firms of establishment size "i".
q - Average nu-.-oer of man-hour? Tworke^3 p-.-: asuabl Lsi""»ent. si. - o "r" .
o
i-'i = Market share aj employment per cent igc for es-.abli^;
S ir it - °
-------
APPENDIX
_
Page 10 of 10
The industry production hours (Q^) were projected for the
1977 and 1983 periods using the regression previously discussed.
Also market share and average production hours per establishment
size were projected.
NUMBER
OF EMPLOYEES
The number of employees was based on the projected average
for 1977 and 1983 and the number of firms previously calculated.
The following equation was utilized to determine employment
levels.
Total number of employees = Average number of x Number of firms
per size class "r" employees per size per class "r"
class "r"
Since the average number of employees per firm and number
of firms in 1977 and 1983 were projected, this was a simple calcu-
lation .
VALUE OF
SHIPMENTS
When the employment levels are established, the value of
shipments can be easily projected utilizing the equation below.
Value of Shipments _ Average Value of Shipments Number of
per size Class "r" per Employee in Size Class Employees in
"r" size Class "r"
Since the average values have been projected for 1977 and
1983 employment and value of shipments per employees, the calcula-
tion of industry levels directly followed such projections.
-------
ENVIRONMENTAL PROTECTION AGENCY
INDUSTRY STATISTICS (!)
SIC 3479
Year
1972
1971
IV 70
1969
1968
1967
lyoG
1965
""964
1963
1962
1961
I960
1959
1958
Capital
Expenditure
(S106)
$22.7
18.0
21.2
18.3
16.3
22.0
17.9
13.0
10.4
8,7
10.6
8.5
6.5
6.2
4.7
Number of
Man- Hours
(ID6)
36.3
39.0
46.2
44.2
44.9
42.3
35.4
37.9
35.0
32.7
31.3
33.5
31.2
25. 2
Number of
Production
Employees
18,300
19,500
24,100
22,000
22,200
21, U2
17,800
18,297
17,100
16,300
15,500
15,800
1^,400
12,900
SIC 3471
Number of
Production
Employees
43,800
42,700
46,400
51,800
49,400
46,800
43,427
39,501
37,785
37,700
41,600
37,100
38,100
37,200
30,500
(Q)
Production
Man- Hours
(]06)
87.2
85.1
93.8
101.2
97.6
92.5
91.4
83.3
7^,6
74.8
80.4
71.6
72.6
72
39,1
Capital
Expenditure
($106)
$41.0
31.1
34.3
54.9
45.0
33.1
40.?
26.8
24.1
20
25.5
16.2
19.1
15.2
15.9
1958 = 100
Price
(Wholesale)
Index
129.3
128.0
127.9
113
109
106
106
102.5
100.5
100.3
100.6
100.3
100.7
100.6
100.4
G
'."Market
Growth)(2)
($106)
$18,500
17,160
16,305
18,353
17,472
17,021
14,897
13,825
12,629
11,756
11,061
10,259
10.258
10.42A
9,401
f'Gtf S'
'': Tbf uolifr vJ,_t
) Tru ^"'stomei au
•aia-- auded by m
.S, Cf-nsa- o2 Maniif
adjusted to I'-^S doll a i
• en the aggregation c-i
es, 1958 ';hro -^1, 1972.
^i, 343,
34:.,
3b3:, 36
3661
714, 3722
X
X
-------
ENVIRONMENTAL PROTECTION AGENCY
AVERAGE NUMBER OF EMPLOYEES PER ESTABLISHMENT
1958
2.1
6.8
13.76
29.42
66.47
144.6
-
„
1963
1.77
6.74
14.03
30.5
67.8
138.1
273.3
_
SIC3471
1967
1.85
6.66
13.98
30.5
66.7
133.0
300.0
500.0+
1977*
1.58
6.50
13.98
30.5
66.7
146.0
325.0
1983*
1.41
6.41
13.98
30.5
66.7
154.0
342.0
1958
1.95
6.5
13.6
30.9
66.3
145.8
309.6
_
1963
1.67
6.6
13.4
29.9
68.7
139.9
318.0
500,0+
SIC3479
1967
1.60
6.7
14.2
31.4
66.2
148.0
333.0
500.0+
1977*
1.21
6.98
14.2
31.4
66.2
161.0
358.0
500.0+
1983*
1.04
7.14
14.2
31.4
66.2
170.0
375.0
500.0+
Ls i dM Is hment
Size by Number
_Ji£ Employees
1 - 4
5 - 9
10 - IT
20 - 49
50 - 99
100 - 249
"50 - 499
Over
Notes: (1) These values for SIC 3471 and 3479 were calculated by dividing the number of employees of each size
category by the number of firms reported for that size. For the purposes of summarizing the data in
Table C-l, values from SIC 3471 and SIC 3479 were averaged using weights of .66 and .33, respectively.
(2) 1977 and 1983 values were projected by determining the incremental change per year using the 1958 to
1967 interval, multiplying by the appropriate number of years, and adding/subtracting that value to/
from the 1967 value.
Sourc-b: U.S. Census of Manufactures, 1958, 1963, 1967.
A.T. Kearney, Inc., 1974.
M
-------
EXHIBIT C-3
ENVIRONMENTAL PROTECTION AGENCY
EMPLOYMENT PERCENTAGES BY
ESTABLISHMENT SIZE(l)
Establish-
ment Size
by Number
of Employee
SIC
Percent of Total Employment(2)
1967
1977
1983
1
5
10
20
50
100
250
- 4
9
- 19
- 49
- 99
- 249
- 499
Total
3471
3479
3471
3479
3471
3479
3471
3479
3471
3479
3471
3479
3471
3479
3471
3479
4.1%
3.8
6.9
6.5
14.6
11.6
34.3
27.4
20.5
17.7
13.2
27.1
'6.4
5.9
100 . 0%
100.0
2.4%
2.1
3.8
5.5
14.6
11.0
34.3
27.4
20.5
17.7
15.2
30.0
9.2
6.3
100. 070
100.0
1.4%
1.1
1.8
5.3
14.6
9.0
34.3
27.4
20.5
17.7
16.3
32.8
11.2
6.7
100.0%
100.0
Notes: (1)
(2)
These values were determined from U.S. Census
of Manufactures data by dividing number of
employees per size class by the industry total
For the purposes of summarizing the data in
Table C-2, values from SIC 3471 and SIC 3479
were averaged using weights of .66 and .33
respectively.
1977 and 1983 values were projected by deter-
mining the incremental change per year using
the 1958 to 1967.
Sources: U.S. Census of Manufactures, 1967.
A. T. Kearney, Inc. 1974.
-------
EXHIBIT C-
ENVIRONMENTAL PROTKCITON AGENCY
MARKET SHARE TRENDS IN THE METAL
FINISHING INDUSTRY FOR ESTABLIHSMENIS OF 1 OT 19 E'-'°LOYEES
MARKET
SHARE
(PERCENT)
15-
ESTABLISHMENTS OF
10-19 EMPLOYEES
10-
ESTABLISHMENTS OF
5-9 EMPLOYEES
5-
ESTABLISHMENTS OF
1-4 EMPLOYEES
-1 1 r
1958
YEAR
1963
1967
-------
MARKET
SHARE
(PERCENT)
30-
27-
24-
21-
18-
15-
12-
9 -
6 -
3 -
YEAR
ENVIRONMENTAL PROTECTION AGENCY
MARKET SHARE TRENDS IN THE METAL FINISHING
INDUSTRY FOR ESTABLISHMENTS OF 20 TO 499 EMPLOYEES
ESTABLISHMENTS OF
20-49 EMPLOYEES
ESTABLISHMENTS OF
50-99 EMPLOYEES
ESTABLISHMENTS OF
100-249 EMPLOYEES
ESTABLISHMENTS OF
250-499 EMPLOYEES
1958
1963
1967
X
M
w
M
H
O
I
Ul
-------
ENVIRONMENTAL PROTECTION AGENCY
TRENDS IN VALUE OF SHIPMENT.0 PER EMPLOYEE
(In $000~rsT
Establishment
Size by K ' iber
SIC 3471
ui' of . Shipment s per Employee
STC 3479
Value of Shiprnentf. i>^
of Emplo 'ees
1 -
10 -
20 -
:. ~ -
100 -
250 -
4
9
19
49
99
249
499
1958
$11.4
9.8
9.2
9.8
iC . 0
10.0
—
1963
$12.0
10.9
10.9
11.2
i ;• . 4
12.0
12.1
1967
$14.6
13,7
12.7
13.2
13.7
14.6
14.1
1977
$17.8
17.6
16.2
16.6
17.3
19.2
19.4
198.r
$19.
19.
18.
Ib.
IS,
22.
22.
7
9
3
6
c,
0
6
1958
$12.5
9.8
9.9
11.0
12.4
16.9
14.6
196T
,14.2
11.2
11.7
12.7
J, - ; "J
20.4
21.8
1967
~ I 7 ')
•< ^ i . z.
14.6
14.2
14. C
19. 9
18.6
23.7
19 7 7 jVf i
$2... v-o./
17.8 -'I.?
18.5 21.i
I/.') 13 '
77 4
20.3 :H. •
32.8 J
Notes:
(I) These values for SIC 3471 and 3479 were calculated by dividing t.ie number of empi -yees of --ach t- •'
Category by tht number of firms leported for that si'e. For the purposes of suitrr.arizinjr t; r- ''' A:a in
Table C-l, values from SIC 3471 and SIC 3479 were a'.,, raged asi'.;' .';-v>. ., )f .c' and . >3, -•,.-., >v. - l-< '
(?) 1977 and 1983 values were projected by deLerminirif? the jncremer.;^1 • i'-in^e per year usinp -ie 1V:.> . 4
": Q67 interval, multl^'i y Lng by the appropriate mmiber o;_ years, and dc'ing/subtivccing chat, value *.^/
from the 1967 value.
: t.xhibit III-3.
A.T. Kearney, Inc. 1974.
-------
APPENDIX D
BATTELLE COLUMBUS LABORATORIES
PROPOSED EFFLUENT GUIDELINES
-------
APPENDIX D
BATTELLE COLUMBUS LABORATORIES
PROPOSED EFFLUENT GUIDELINES
BEST PRACTICABLE CONTROL
TECHNOLOGY CURRENTLY
AVAILABLE
Recommended effluent limitation for the metal finishing
industry applicable to existing sources discharging to navi-
gable waters are summarized in Table 1 and the specific
effluent limitation guidelines and rationale are discussed in
greater detail in Section V of this report. The guidelines
have been derived from the product of estimates of concentra-
tions and water uses considered achievable. This product is
multiplied by two to allow some leeway in practical processing.
Chemical treatment of wastewaters to destroy oxidizable cyanide,
reduce hexavalent chromium, and remove all but small amounts
of the heavy metal pollutants represents the Best Practicable
Control Technology Currently Available (BPCTCA) for existing
point sources. This is the best practicable technology for
subcategory (1), for which a water use of 80 I/square mile is
estimated. Chemical treatment is the best practicable tech-
nology for subcategory (3), which is distinguished from sub-
categories (1) and (2) by the fact that high concentrations of
organic materials are used that can appear in the rinse water
and therefore require specific effluent limitation guidelines.
Footnote: (1) See page 7.
-------
APPENDIX D
Page 2 of 10
Processes in subcategory (4) are distinguished from those
in other subcategories by the fact that some of the operations
require no discharge of effluent.
The effluent limitations can be achieved in most cases
by July 1, 1977, by using chemical treatment and by practicing
water conservation. Additional currently available in-process
control technology designed to recover and reuse process chemi-
cals and water and/or reduce water consumption may be required
to meet the effluent limitations depending upon the kind of
parts being finished or the nature of available processes
facilities.
The technologies on which such limitations are based,
emphasize use of end-of-process chemical treatments to remove
pollutants to the greatest practical degree with simultaneous
reduction of effluent discharged using currently available in-
process control technology and directed towards eventual elimi-
nation of discharge of pollutants as metal finishing equipment
is modified or replaced.
The presence of complexing agents in electroless plating
complicates setting up guidelines for electroless plating
processes. The complexing agents can have a detrimental effect
(which has not been quantified) on the chemical treatment of
wastewaters so that the concentration of heavy metal ions cannot
be reduced to the anticipated levels. Processes for electroless
plating on metals have been placed in subcategory (1) and the
-------
APPENDIX D
Page 3 of 10
processes for electroless plating on plastics have been placed
in subcategory (2). In these suhcategories it is assumed that
the concentrations of heavy metals in the effluent can be re-
duced to low levels, i.e., 0.5 mg/1 for copper and nickel, and
this has been demonstrated to be possible either because of the
small size of the electroless process, as compared to other plant
processes, and the relatively small amount of water contributed
to the waste treatment facility because the unknown (proprietary)
complexing agent does not seriously interfere with the chemical
treatment of wastewaters. However, it is possible in some situ-
ations that the amount of complexing agent contributed by the
rinse water, ill of the right type, will interfere with chemical
treatment of the wastewater to the extent that effluent limita-
tions guidelines under subcategories (1) or (2) are not met by
exemplary chemical treatment. In this case, another effluent
limitations guideline must be applied providing the rinse water
from the rinse following the electroless plating step and dumps
of the electroless ba^h itself are treated and clarified
separately. It is estimated that a water use of 80 1/sq m can be
attained for the rin_-;e following the plating operation, which is
not as critical as the rinses following activating and accelerating
of plastic basis materials. Because these operations are included
in the electroless plating process on plastics in subcategory (2)
a water use of 160 1/sq m was estimated for this latter subcategory.
However, chemical treatment of the rinse water used after the
electroless plating operation or i^cep probably will not reduce
-------
APPENDIX D
PageT- of 10
metal ions to low values in the effluent, i.e., cop»per and nickel
to 0.5 mg/1. An estimate is made that the value will not be
reduced below 5 mg/1. This estimate has no basis in fact and is
merely an order of magnitude greater than the concentration of
0.5 mg/1 estimated to be attainable in the absence of complexing
agents. Two times the product of the water use, 80 1/sq m and
the concentration, 5 mg/1 is 800 mg/sq m and is the value for
the effluent limitation guidelines for the metal plated. The
effluent limitation guidelines for all other constitutents in
the treated wasteway from the electroless plating step will be
those listed for subcategory (1).
Thus, a plant having electroless plating processes has a
choice of guidelines depending upon whether it decides to treat
all wastewater together or segregate a part of the water from
all the electroless plating.process and treat it separately. If
all of the wastewater is treated together the values in Table 1
for subcategories (1) and (2) apply. If the rinse water following
the electroless plating operation is segregated and treated
separately, the effluent limitation guideline of 800 mg/sq m
applies to the segregated effluent and the values in Table 1 for
subcategories (1) or (2) apply to all other wastewater from the
electroless plating process.
-------
APPENDIX D
Page 5 of 10
The effluent limitations allowable for any single day are
two times the value of the 30-day averages given in Table 1 and
two times the value of 800 mg/sq m established for the metal being
electroless plated if this effluent limitation guideline applies.
The rationale for using the factor of two is given in Section IX.
BEST AVAILABLE TECHNOLOGY
ECONOMICALLY ACHIEVABLE
The effluent limitation attainable through the application
of the best available technology economically achieveable by
existing point sources in the subcategories listed in Section I is
no discharge of process wastewater pollutants to navigable waters
by July 1, 1983. The achievement of no discharge of pollutants
is believed to be possible through a combination of technologies
that are in existence, that are being developed, and that remain
to be developed before 1983. There is considerable information
available on how to reduce water use in the plant through proper
design of processing lines and correct operating procedures. Min-
imizing this water use minimizes the treating the wasteway that
is produced. Reverse osmosis, electrodialysis, and special ion-
exchange systems are under development to recycle water in pro-
cess loops and thereby reduce water to be treated and are also
being tested for recovery of process water from waste effluent.
Now techniques for water recovery should come from the broad
scientific and engineering base in the United States, although
it is difficult to pinpoint what specific technologies will
emerge before 1983.
-------
.aw sou; ;E i,;r
-------
TABLE 1. REC012ENBED EFFLUENT LIMITATION FOR THE METAL FINISHING IKDU?T?Y TO 5E ACHIEVED
BY JVLY 1, 1977, BASED ON BEST PRACTICABLE CONTROL TECHNOLOGY CURRENTLY
AVAILABLE (BPCTCA) 30-DAY
Total Oxidize
TSS , Cyanide, Cyanide,
ffS/ JP8/ n*8/
" ic«trgory B /op » /op **/op
ripctrepUMf.,5 cr'.^.m and 3200 flO 8
i,' ; • " s ; co.wer s icn
r' it i <• ~s and en lorlryj*
'•^erical trilling and
Mectiol^i"! placing on 6403 160 " 16
plastics, electro"
, •-, -^, (_ i r ^ •- V. t n * 71 a: vl th
e lectroplac Ing
el^crrochc-nlcal ma* 00 0
if i-,; vu,b neutral
tl.:ttral>te»
If rli.sci £ ro-n c' e ciictrol**i placing ofxrttlcm for
Effluent Limitations (*.<*. «iO
H«XB valeric Total
Fluoride, Aluminum, CaOmiim, Clironluut Chromium, Copper, Iron, Lead, MicVel, Silver, Tis , -Unjt t^S *'t! -tnl^f^
ng/ n>g/ 5£/ M/ ffg/ PB/ ffg/ "8/ y8/ ?«/ ^8/ S*/ v\ ' "8J
B?/Op • /Op BT /Op *r/0p «^/Op "^/Op IT /Op K?/Op If/Op «T* /Op W 1 ^ »* /Op J'fl tt* !ri,l 1i' V*
2400 160 80 1 00 £2 16Q ftO W tt H() *0 B •» -
4800 320 160 16 160 160 120 1(0 160 16 320 160 -' ~| — ^,j
2400 160 80 B 80 80 160 80 80 6 160 60 6*9 4000 ; &n
4600 320 160 16 160 160 320 160 160 16 320 160 6-? -» jj
0 0 0 0 0 0 0 0 0 - 0 0 " — Q
copper aod nickel ID aubcategorita (1) and (2) are tttrat*d and tret tad aeparately ;be affluent
m.
FOOTNOTES FOR TABLES 1 AND 2
(o; The effluent limitations and standards of performance are defined as the weight 01
pollutant in milligrams discharged per square meter of total area finished. The
total area finished is the sum of the areas subjected to eacn operation requiring
rinsing with the exception of the initial alkaline cleaning operation .ir,^ the fir.;-.
pickling operation.
(b) Single-Day Maximum is the, maxitnr.r:; value for any one day, and is 7.0 times the 3; Da>
Average.
(c) Thirty-Day Average is the maximum average of daily valuer for any consecutiv^ 30 ri.--r
(d) Total metal (in solution and in suspended solids) in sample.
;'e) Chromium (total) is the sum of all both hexavalent and trivalent chrorr>Luia, bc'ch ii ^
solution and in suspended solids, ov •"
ft;
(f) Oxidizable cyanide is defined as all detectable cyanide amenable to oxiciauir; by "J'
chlorine according tc standard analytical procedures. c
!—)•
(g) Total suspended solids retained b/ a filter according to standard analytical 'I-<
'jres.
-------
TABU J. RECOMMENDED STANDARDS OF PERFORMANCE FOR THE HETAL FINISHING INDUSIHT
TO BE ACHIEVED BY NEW SOURCES, 30-DAY AVERACE
Effluent Umltatione <«.d.«.*>
1.
2.
3.
4.
S^c.t«,or,
Elt.tr
l^f'-
dlil
c'-i/rr
«tc'.
U.cti
?l3S
chec:
acid
• lee
EUctr
Koraqj
e'.ec
ehjn
pluln, c^on and
ilon placing; ano-
3; converalon
cal Billing and
14
Hi* plat li& on
lei; elcctro-
cal QJchlnlng vtth
cl'^ctrolytea;
roplat Ing
painting
cut plating;
tuch?2>lckl na-
rg vlth neutral
eiec rol/tci
Total
TSS t Cyanld«t
»{;/ Rg/
1600 40
3200 BO
1600 40
3200 M
0 0
0»ldlr«
Cyanlda, fluorld*,
Dig/ Vg/
•?/op *r/op
4 1200
1 2400
4 1200
t 1400
0 0
HexavalonC
Alualmaa, Cadnlua, ChcomtuMf
Bg/ ««/ »g/
•r* /op «? /op •? /op
tO 40 *
160 10 t
W 40 4
160 M t
00 0
luUl
(. rowlo,.
•?/op
40
to
40
to
0
Capper,
•«/
40
to
40
to
0
Icon,
*S/
to
160
to
uo
0
Lead, Mlckal.
•g/ *t/
tf/af m^/op
40 40
to to
40 40
to to
0 0
lllv.c,
«?/<>P
4
t
4
1
0
Tlo. tine, COii,
•ft •»/ l«/
•2/op «?/op pH «
-------
Estimated Capital Costs for
BPT Technology
TREATMENT EQUIPMENT COSTS, VALUES IN U. S. DOLLARS. 1914
5 Employed
A.
8.
jj
<:.
n.
L.
r.
r..
fiem
I'm.: -C!C l!okV s'Pl!I
\j»ln:=. < 01. troll, Montton & RccorJcrs
Slirrcrs
Pnnip>
1 .ll'kl
t larifu-n
Lx^'UMS'il)
ivi|i>iiHH fillers
( hlt'nn.iror
Su''I.)tM A
Trcvtrcn' Ciit'Jng
t.ii J i DSt. I'rhan
Rur.nl
L.'hJ < o.i, Pui A Lagoons. Urban
Rural
SjSioi.ii n
I Vh.in
IViral
Total A'. 1
Urb*n
ruwl
ryui. UK-HI Innvilatloa
Tot.i! i Ml '. than
Hur.il
(7. 1). LCI. i lar.fler, trban
SluJ^c Filter (Option)
Urban
Rur.il
TwJl I.-.F
('than
ltur.il
A
410
2, COO
1,100
3,740
2.945
12.550
100
2.COO
--
..
--
20,015
3.900
245
50
40
10
4.275
4.050
30. -120
30.095
5.210
:iS.5jO
33,305
22. U80
3. SCO
3,890
39.J90
:I9. 195
a
420
4.850
1.100
4,770
3,550
!2.550
I'lO
2.100
-•
..
3.550
33.620
5.910
305
15
30
10
6.305
5.995
39. 925
39.015
0.125
40.C50
•lu'.S'iO
34.100
4,590
4.020
51,240
50,960
C
550
5,080
1.100
4,815
4,930
14, 910
230
2,100
"
3,550
--
31.835
8. ICO
500
100
30
10
8.090
8.210
40,515
46,155
1,580
54,155
53,735
30.255
4,850
4,880
50,005
88. CIS
D
005
1,215
1,100
C.300
5.300
14,000
230
3.300
--
3,550
3.550
40.050
9.900
010
125
45
10
10.015
10,095
58.665
56,145
9,210
65.875
65.355
50.975
4.300
4.330
70,175
69,085
A
900
2.945
1,100
4,940
2.780
19, 100
100
3.15C
--
..
--
35,005
9,660
595
120
225
45
10.480
9.825
45,545
44.890
7,015
52,500
51.905
33.4GO
7,150
7,880
60,310
59,185
10 Employees
B
945
6.080
1,100
6, 3SO
3.100
19,000
110
3,200
•-
._
3.550
43.095
11,760
720
145
185
40
12. 065
11.945
55.760
55.040
8,020
C4.330
03. COO
4.-S38
1,120
1.850
72. 100
'11,510
C
1.335
5,310
1,100
0.800
4,005
12.400
230
5,100
--
3,550
--
50.430
15.000
925
185
235
60
16, 270
15.305
66,700
65.735
10.000
70,190
75.8C5
54.390
1.745
7.880
84,535
83.705
D
1.350
7.445
1.100
7.890
5,105
22,400
230
5,100
--
3,550
3,550
57,720
10,710
1.025
205
215
55
18,010
10.910
75,130
74.690
11.545
87.215
86,235
64,875
1,145
1,880
95,020
94.115
A
1,545
2.945
1.100
5,650
3.895
25,400
100
5, COO
—
—
--
46, 295
13.020
795
ICO
240
45
14.025
13.225
60, JCJ
59, 520
9,200
69,580
08,780
44,180
11, U80
11.510
80, 900
80,290
20 Employees
B
1.525
5,310
1,100
7,110
3,440
25.400
100
8.500
--
..
3,550
54.095
18. MO
1.135
230
370
75
20,0-15
18,845
14, 140
12.940
10. 820
84.900
83.700
59.500
11.240
11,490
90.200
95,250
C
1.725
5.310
1,100
7,880
5.715
28,000
230
6.500
"
3.550
--
CO, 010
19,050
1.110
235
300
60
20. 520
19.345
80,530
19.355
12.005
92,535
91,300
04,535
12,380
12,580
104, 915
103,940
D
1.740
1,445
1.100
12.340
1,200
28,000
230
6.500
--
3.550
3,550
11.005
21. ISO
1.3CO
200
310
05
22,799
21.505
94.455
93, 170
14. 335
108,700
107. 505
80.790
12,380
12, 580
121.170
120. OSS
A
2.490
7.185
2,200
9.300
8,355
47,100
410
14,00'i
140,000
550
--
243.200
29.5211
l.Sli)
305
415
95
32. 805
29, D80
215.005
273. 180
48.640
323.045
321,820
276.545
12,930
13.220
J36.575
335,040
20 Plus EmploYeei
S
2.535
10.610
2.203
11.610
13. 955
47. 100
410
11.000
140.000
550
J.550
252.580
33,150
2,030
410
520
105
35.700
33. ;.C5
J88.280
280, 245
50.520
33S.SOO
33J.765
291.700
12. 930
13,220
1151.730
349.985
C
2.890
9.690
2,200
11,880
12,230
49.000
COO
15.COO
140.000
3,550
—
254.240
4-S.370
2.720
545
1C5
155
47,855
45.010
302.095
299. 310
50,850
352.945
350, 100
30,335
12,550
13,050
305.495
303.210
D
S. 965
14.485
2.200
12.740
11.130
SO.fOO
110
15. COO
140, COO
3.55J
3,550
204.135
45,000
'.'."60
:.;o
E.'.l
160
•fl.SIL
*r,.osc
313.015
310.210
52. 830
305,905
363.040
315,305
12.550
13.050
318.455
376.09.1
Tl
0)
OQ
:=-- (t)
VD
o
M
Source: Battelle Columbus Laboratories-
-------
APPENDIX D
1 aga 10 of If;
I
H, DOLLARS
ATMENT, U,
KC COSTS, WASTE THE
NUALOPERAT
I!
|
e
sT
°
£
5
S
1
S
^
""i
£
1
s""
!
5
£
?!
Ul
5: 5
"5 2
* i
A
^
;
-„
_
a *"
V ^
. s „ 5 s „ s ,, ? „ 3 , s „ , p
2 S 2 ^ ^ S 5 V ^ S « 3 - " " 7
,.-S; : = ;: :,« ="i
. «,.„ .„.- ,..o 33"^
oa oo » t
15S2
^11 ?1- II- §§§§
- : a , 2 s « ; 3 g - , =^«2
?SS§ 3 ? S g 2 I 2 x S? = g
-••»•»•* ^l ^ j _^ .,,,.,-, j ^ .' j
_ _ i
„ J .Z £ "V"-i J; r" - -:?.
:~cll sill lill Itis
•-•-«•» ; ; 2 s S « i f S i ^ •;
QJ
•1-1
O
4-)
rrt
O
1 i w
> ; 0
1 1 3
X =
I "~, = r — i
~ * 5 i I— i
3 ' | ^
5 ' • ~ -L-1
?-» ' 5 .U
II < S ct)
"- "= i 4' CQ
I 2 -a «
!i f :IM ] i
•' - ' - -" - - LO
«i
------- |